Newer airlines which have been urging the government for scrapping the antiquated provision which bars them from flying overseas till they have completed five years of operations and have 20 aircraft (5/20) would soon see their wish being granted. However, this would come with a price ? they may be asked to fulfil some regional connectivity criteria before they can spread their wings wide. This means that if new airlines like AirAsia or Tata SIA?s Vistara fly a certain quota of flights, which the Centre earmarks to smaller towns and cities, they can fly abroad.
Speaking at the Express Group?s Idea Exchange programme, civil aviation minister P Ashok Gajapathi Raju said that the 5/20 rule is antiquated and without rationale, and needed to be scrapped. However, it needs to be replaced with something and regional connectivity is the government?s priority. ?The 5/20 rule to my mind is antiquated. Nowhere in the world there is such a regulation. When we try to remove it, we also have to replace it. Now that angle is evolving. Let us say it straight, regional connectivity is a priority even though some of it is loss making, or there is an element of cross subsidy,? Raju said.
Interestingly, Raju?s ministry has recently come out with draft guidelines mandating airlines to deploy on regional/remote routes the same capacity which they deploy on the 30 trunk routes. This has been opposed by all the carriers as it would increase their cost at a time when most of them are posting losses. Airlines like Vistara has specifically said that newer airlines should be exempt from this rule.
Raju also said that the scrapping of the 5/20 rule would enable the country to utilise higher number of seats under the bilaterals. ?On the international side, India has a lot of unused bilaterals. Now, if an Indian player uses it and contributes to the GDP, we would be rather happy. If an Indian player wants to give regional connectivity and also wants to fly abroad and does not have 20 aircraft, are we going to not utilise bilaterals? Will we not lose there? I would like to develop such a policy,? he said.
The minister accepted that the industry is divided on the issue with the older players not wanting the government to change the rules because they feel that newer players can more easily access bank loans that can be used for rapid expansion. ?I had an interaction with the airlines. Old players like it because it gives them a comfort level, what is bothering them that new airlines would have cleaner books and financial institutions may be more inclined to lend to new players. I think the government would look to promote more activity in India, not throw out the baby with the bath water,? Raju said.
During the last days of the UPA government the civil aviation ministry had drafted a Cabinet note for scrapping the 5/20 rule but before they could process it the model code of conduct in the run up to the parliamentary elections was imposed.
Raju said that he wanted to bring air travel to the masses, but is having trouble convincing state governments in setting up low-cost ?no-frills? airports. The plan is to set up 100 such airports with just basic facilities over the next few years at a cost of about Rs 90-120 crore each, as compared to around Rs 2,000 crore for a full-fledged airports, but state government support is necessary not only for the land acquisition, but several other facilities to ensure smooth operations.
?I am having difficulties in pushing no-frills airports with state government ministers. Local people believe that airports should reflect their culture. We are trying to explain that when you add frills it pushes the costs and when that gets divided by the numbers of passengers, then the burden on each passenger gets difficult to justify. It will be successful in areas where there is no airports now,? Raju said.
Hurdles to take off
On low-frills airports
* We are facing difficulties with state governments, who want bigger airports reflecting local culture but costs then get pushed up. We have explained to them that airport expansion can be the second stage as passenger growth is needed first.
On FAA downgrade
* The government had been sluggish with making the changes.
We have completed the requirements and the visit of the DGCA team to US went well. We expect an upgrade to happen soon.
ON air cargo growth
* This requires cooperation of states because of forward and backward integration. High quality goods need to be produced, which then need a market to be sold in.
ON us immigration pre-clearance
* We are interested because it will help Indian travellers. However, the matter is now with the external affairs ministry.
