The fact that the government has not been able to come out with a clear aviation policy statement after being in power for nearly 20 months speaks volumes for how the sector has been run, and how vested interests continue to block its opening up. Among the most detrimental policies has been the 5/20 rule – an airline must have flown for 5 years and must have a minimum of 20 aircraft before it can fly overseas – that stymies global operations of newer airlines. Such a regulation should never have been enforced because it is there only to give older players an advantage over new entrants. The government now proposes to re-write the rule, or maybe not. While the draft civil aviation policy, announced on Friday, lists the options of retaining or withdrawing the rule, in all probability it is the third option which will be exercised – this allows airlines to fly overseas subject to them accumulating some minimum Domestic Flying Credits (DFC). The DFCs are an improvement from the current 5/20 rule, but there is no real reason to have them at all except to delay newcomers like Vistara and Air Asia’s overseas foray, to lower the competitive intensity for older players like IndiGo and SpiceJet.
It is equally unfortunate that little has been done to fix the regressive Route Dispersal Guidelines (RDG) which force airlines to fly to locations that are un-remunerative. While the government may have its own reasons for ensuring there is air connectivity in certain parts of the country, such as the north-east, there is a case for compensating airlines for flying loss-making routes.
30/10/15 Financial Express
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It is equally unfortunate that little has been done to fix the regressive Route Dispersal Guidelines (RDG) which force airlines to fly to locations that are un-remunerative. While the government may have its own reasons for ensuring there is air connectivity in certain parts of the country, such as the north-east, there is a case for compensating airlines for flying loss-making routes.
30/10/15 Financial Express
