5/20 rule: Fair or unfair?

Tata Group chairman Ratan Tata’s accusation against the older airlines, like Spice Jet, Goa Air and others, came as a bolt from the blue to them. In one way, Mr Tata is right, even though his own interests are involved in wanting the 5/20 rule scrapped. The rule allows only those airlines to fly abroad that have a 20-aircraft fleet and five years of domestic service. He has invested in two airlines — Vistara and Air Asia — which will have to fulfil these conditions before they can fly to global destinations. Both these airlines have yet to take off financially.

The 5/20 is an illogical and discriminatory rule allegedly designed by former aviation minister Praful Patel to favour a single airline. It worked doubly against the interest of the old carriers as foreign airlines were allowed to fly to lucrative destinations in India without any reciprocal arrangement. Airlines like Spice Jet and Go Air were kept on hold until they fulfilled this rule, thus shackling their growth. With Mr Tata now lobbying for its scrapping, the other airline owners feel it would be extremely unfair to scrap the 5/20 rule just to help two airlines that have foreign partners and an investor of the stature of Mr Tata. Mr Tata’s accusation has brought a quick retort with Spice Jet asking Mr Tata, and quite rightfully, to observe the rules and serve domestic passengers till they fulfil the obligations they had agreed to when they got their licence. Both sides have a point. It would be interesting to see whether Mr Tata’s enormous clout wins over that of fellow businessman Nusli Wadia of Go Air and others.