PERSPECTIVE OF THE GOVERNMENT
evolution of the policy. As expected, the Indian airline industry was clearly divided on the issue with legacy carriers opposing any changes to the 5/20 rule while the newly established airlines vociferously insisting on its abrogation. It will be some time before the details of the newly approved policy document is made available in the public domain and its impact is accurately evaluated by all the stakeholders.
Just to recap, the highly controversial 12-year-old 5/20 rule enforced by the UPA Government that required new carriers entering the market to meet with two preconditions before they could be permitted to operate flights in the international segment. Application by a newly established domestic carrier for a licence to fly on international routes would only be considered if the airline had a minimum of 20 airliners on its fleet and had completed five years of operations in the domestic sector. With the arrival on the scene of heavyweights such as AirAsia India and Vistara, the two joint venture airline set up by the house of Tatas with AirAsia Berhad and Singapore Airlines that had an immaculate global reputation, the 5/20 rule suddenly got embroiled in an ungainly controversy. However, the 5/20 rule has now been replaced by what is being referred to as the 0/20 rule. This implies that a new entrant will be required to have a fleet of a minimum of 20 aircraft before it can apply for licence to operate on international routes. The precondition of experience of five years of operation in the domestic sector has been done away with. At present, Vistara has 11 aircraft in its inventory and AirAsia India is operating with six. Both these carriers will be inspired to quickly build up their fleet strength to 20 to benefit from the abrogation of the 5/20 rule. This however, may take a few years.
Thankfully, the suggestion by the MoCA to introduce a system of accumulating a certain number of domestic flying credits (DFC) points before becoming eligible to operate on international routes, has not been adopted. If the system of accumulating DFC points had indeed been adopted, it would have involved considerable amount of number crunching and, as observed by experts, it would have been a case of “the cure being worse than the disease”! Mercifully, better sense has prevailed.
As per Ashok Gajapathi Raju, the Minister of Civil Aviation, the NCAP approved by the government on June 15, 2016, will be a ‘game changer.’ He went on to say that as the Indian civil aviation industry was expected to become the third largest in the world by 2022, it would be necessary for the government to have the right intentions, vision, planning and proper execution. The Minister stated that the objectives of the National Civil Aviation Policy are to “make flying affordable, safe, convenient”, promote balanced regional growth, tourism, infrastructure and, most important of all, to help improve the ease of doing business. The Minister also observed that the Indian civil aviation sector was most under-penetrated. Referring to data, the Minister stated that while around 35 crore individuals constitute the middle class in India that have the financial capability to avail of air travel, the total number of persons travelling by air in the course of a year stands at a measly eight crore. The average Indian thus flies only once in five years. There is obviously immense scope for growth.
With the implementation of the NCAP, there is a good chance that the Indian civil aviation industry and the air traveller could look forward to good times ahead!