Govt to replace ‘5/20’ rule for flying to encourage the entry of the new Indian carriers and enhance regional connectivity
Sweta Ranjan | May 6, 2015 | New Delhi
Aiming to enhance regional connectivity, the civil aviation ministry is mulling ways to dilute the rules for international flying.
The ministry is aiming to form an inter-ministerial group to look at the guidelines for Domestic Flying Credit (DFC) system as a replacement for 5/20 rule.
At present, the rule, popularly known as 5/20 rule, makes it mandatory for the domestic airlines to fly on domestic routes for five years and have a 20-plane fleet before going international.
The aviation ministry has been mulling over the replacement of the 5/20 norms for quite some time. With the entry of new carriers like Vistara and AirAsia the ministry has been contemplating over the scraping of norms.
In an exclusive interview with the Governance Now, civil aviation minister P Ashok Gajapathi Raju, had said, “5/20 is a regulation that you will not find anywhere else in the world. What is the sanctity of 5 years. What is the sanctity of 20 air-crafts? Our concern is enhancing regional connectivity. We won’t like to throw the baby with the bath water. Bath water has to go, baby has to remain. When we want regional connectivity why don’t we see that clearly? For us it is sacrosanct. India is a vast country so we keep the regional connectivity. Implement something that is workable and that invites new players.”
“The 5/20 rule will be reviewed with a view to encourage the entry of the new Indian carriers. We can have a transparent regulation which will be transferable from airline to airline. Suppose some airlines decide to go into propeller types of aircraft and connect our own smaller places. We have unutilized airports.”
However, the new DFC system is not being applauded by the aviation industry.
If the 5/20 rule is replaced with DFC system the airline will earn the cross country flying clearance on the points basis. Under the DFC system, points will accrue from flying to remote locations. After accumulation of a certain number of points the airline will get the clearance.
Under the new formula of DFC, flights being operated to small cities will earn more points than those on trunk routes. Points earned by the airlines can be redeemed against international flying. A total collection of 300 points will make an airline eligible for long-haul international flights (like the US and UK) and 600 allows it to fly short-haul international routes (like Hong Kong).
The old players in the industry are viewing the replacement as needlessly complicated. The Federation of Indian Airlines, the union group for GoAir, IndiGo, Jet Airways and SpiceJet, is expressing apprehensions towards the change in rules and believing it to be a cake walk for new airlines. But industry experts see the DFC formula as not an easy task even for the new airlines like Air Asia and Vistara. A senior official for the IndiGo airlines in his remarks quoted it as unnecessarily complicated.
Even the newer airlines are viewing this as a complex agenda. A new airline would require 10-12 aircrafts minimum to gather 300 DFC points the get clearance for international operations.
There might be a tough route ahead for AirAsia and Vistara as currently they both have 4 and 6 aircrafts respectively.
Earning of DFC points will also depend on routes an airline decides to operate on. For Category-III routes, an airline will be entitled to earn more points than on Category II routes. A source from the ministry reveals that the Category III routes will generate points in multiplier of five whereas for Category II it will come in multiplier of three.
At present AirAsia and Vistara are flying on Category I route. The DFCs will also be affected in terms of number of aircrafts as AirAsia is already running behind the schedule in terms of sufficient number of planes.
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