India’s cabinet on Wednesday cleared a new civil aviation policy with some changes in the rules that allow carriers to fly abroad, besides measures to promote regional connectivity and boost cargo operations.
Civil Aviation Minister Ashok Gajapathi Raju said. said on Twitter that airlines would no longer need to wait for the five years of operations earlier required before they can begin flying abroad, but must still have 20 jets in their fleet.
#NCAP Any domestic airline can start international operations of it puts higher of 20 aircraft or 20% of total capacity on domestic routes— Ashok Gajapathi Raju (@Ashok_Gajapathi) June 15, 2016
#NCAP Airlines no longer need to wait for 5 years before starting international operations— Ashok Gajapathi Raju (@Ashok_Gajapathi) June 15, 2016
#NCAP Domestic Airlines will not require prior approval before entering into international code share agreements— Ashok Gajapathi Raju (@Ashok_Gajapathi) June 15, 2016
Easing the 5/20 rule would mark an important further step towards liberalising India’s aviation market, the world’s fastest growing.
Moreover, in order to boost regional connectivity, airfares have been fixed at Rs 2,500 for one-hour long flights.
The policy seeks to create an eco-system to handle 300 million domestic passengers by 2022 and 500 million by 2027, and 200 million international travellers by 2027. India had seen 139.32 million domestic and over 50 million international air travellers in 2014-15.
The Civil Aviation Ministry had sent the proposed policy to Cabinet for approval on June 3. The aviation policy has 22 points and includes proposals for new airlines to fly international routes before completing five years, regional connectivity and tighter guidelines for grant of bilateral international rights.
The NDA government had for the first time unveiled the policy draft in November 2014, subsequently replacing it with another draft in October 2015.
Initially, the policy was expected to be finalised in the last financial year as certain proposals were to be implemented from April 1, 2016.
Since then, the government has been moving back and forth on the matter, primarily to strike a balance between various stakeholders on their glaring differences over issues like the 5/20 rule that allows a carrier to fly abroad only if it has 20 aircraft and has flown domestic for five years.
The policy aims to bolster the domestic aviation sector by tapping its high growth potential with provisions such as capping airfares at Rs 2,500 for a one-hour flight, auctioning of unilateral traffic rights, tax incentives for airlines, maintenance and repair works of aircraft besides mooting 2 percent levy on all air tickets to fund regional connectivity scheme and providing viability gap funding for airlines to encourage operate on regional routes.
The issue of international flying norm or the 5/20 rule has witnessed extensive debate, with legacy carriers opposing any changes to the rule, while start-up airlines frantically demanding its scrapping.
Civil Aviation Minister Ashok Gajapathi Raju had last week virtually disapproved the continuance of this rule asking who has benefited from it, indicating that the government could even mull scrapping it.
Interestingly, exactly 10 years ago, on June 8, 2006, then Aviation Minister Praful Patel had said that “the draft civil aviation policy is ready and could be taken up by the Union Cabinet for approval this month itself.”
Since coming out with the draft policy in October last year, the Ministry has held extensive consultations with various ministries, apart from stakeholders like airlines, airport operators and ground handling agencies