The Centre for Asia Pacific Aviation India, in its recent report on maximising the contribution of aviation to the Indian economy, is the latest to join the long list of agencies calling on the government to reconsider the socalled 5/20 rule.

What is it?

The rule stipulates that a domestic carrier must have a fleet of 20 aircraft and should have operated in the Indian skies for five years before it becomes eligible for international operations. The Union Cabinet on December 30, 2004, had approved the 5/20 rule. There is no clarity on why the rule was decided on. At that time, bureaucrats told the media that India could ill afford a situation where a new startup airline from the country crashed while on a flight abroad. This would sully the name of Indian aviation. A five-year unblemished track record would ensure more safety on international flights.

Why is it important?

The rule immediately allowed Jet Airways and Air Sahara to benefit as it broke the monopoly of Air India and Indian Airlines to operate flights from India to international destinations.

But Air India and Indian Airlines also benefited from the 5/20 rule as they were the sole Indian carriers allowed to operate from India to the Gulf, including to the UAE, Qatar, Oman, Bahrain, Kuwait and Saudi Arabia for another five years. At that time, the Gulf routes were the most profitable ones for the two state-owned airlines. But now two new carriers — AirAsia India and Vistara — are also keen to fly abroad.

Also, since 2004, international airlines have been allowed greater access to India through the exchange of air services bilateral agreements (ASA). By definition, an ASA allows Indian carriers an equal number of flights to the country with which the ASA has been exchanged. But in reality this has not happened.

Take the Dubai-based Emirates, an airline that started in 1985 with Mumbai being one of the first routes it connected. It now operates 186 weekly services from India to Dubai connecting 10 cities here. Or the bilateral with Germany. Lufthansa operates 47 weekly flights to India while Air India is the only Indian carrier that offers a daily service to Frankfurt.

While over 70 international airlines operate to India, currently only Jet Airways, Air India, SpiceJet and IndiGo fly to international destinations. Startup carriers such as Vistara and AirAsia India say issues including taxation and 5/20 are slowing them down.

Why should I care?

Any change in the rules will mean Indian passengers will get the option of two more players — AirAsia India and Vistara — for international flights. The options could increase if smaller players such as AirCosta and easyJet also decide to operate abroad.

The bottomline

The Indian aviation industry is vertically split on 5/20. Despite Civil Aviation Minister Ashok Gajapathi Raju being vehemently against the rule, as are Vistara and AirAsia (Vistara has completed eight months and AirAsia India has completed just over a year in the Indian skies and have seven and five aircraft respectively), revoking it will not be easy. The existing airlines are totally opposed to removing the 5/20 rule. Air India has written to the government against changing the rule. Jet Airways and IndiGo have also expressed opposition in private, but have not made a public commitment yet.

The final call will have to be taken by the Union Cabinet.

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