Thursday, January 21, 2016

Local airlines raise ownership concerns of new players to stall 5/20 scrapping

Ministry of Civil Aviation (MoCA) may be tilted in favour of scrapping the rule that allows domestic airlines to start international operations only after completing five years and ownership of 20 aircraft, also known as 5/20 rule, but local incumbent carriers continue to vehemently oppose any such move.

An email shot off to the government on Wednesday by Federation of Indian Airlines (FIA), which represents leading domestic airline IndiGo, Jet Airways, JetLite, SpiceJet and GoAir, makes a case for retaining the 5/20 rule by raising concerns over principles of substantial ownership and effective control (SOEC) being flouted by foreign partners of "Indian airlines".
The airline industry is split on 5/20 rule with new airlines like AirAsia and Vistara, both joint ventures of the Tata Group, proposing its removal while incumbents want it left untouched. The government has been working on draft National Civil Aviation Policy (NCAP), 2015 for over a year now and is expected to submit its final draft to the union cabinet later this month.

dna has gone through the email addressed to the minister of state for civil aviation Mahesh Sharma that says: "No major country in the world allows SOEC of its airlines to be with foreign airlines. India has permitted AirAsia and Vistara to operate despite being effectively controlled by their foreign parent".
21/01/16 Praveena Sharma/dna
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