The Indian aviation sector can take off to a phase of sustainable growth if restrictive rules like 5/20 and First Right of Refusal to Air India in regard to international routes are dispensed, and ASSOCHAM report has said.
With the sharp fall in fuel prices, the Indian aviation sector needs to replace or rework the 5/20 Rule in order to equip Indian commercial airline operators with long term financial security and international quality standards.
The paper suggests that revisiting this rule will provide incentive for new players to enter the market due to advent of opportunity for enhancing revenues, yields and ultimately, profits.
The study that is conducted jointly by ASSOCHAM-Yes Bank on “Indian Civil Aviation- At the Cusp of Taking Off” talks about optimising bilateral agreements and international traffic rights, the Ministry of Civil Aviation, in coordination with the Ministry of External Affairs. It emphasis is laid on undertaking higher number of routes, especially in the lucrative markets such as the US and Europe.
Besides, “Air India’s First Right of Refusal on new routes should be relooked at with the objective of private airlines getting fair opportunities to expand their international routes”, the ASSOCHAM paper said.
As per ASSOCHAM Secretary General D S Rawat, there are situations where fast growing airlines have certainly acquired a large fleet offering top service but may not have completed five years. The award of overseas operations license should be linked to completion of certain number of hours/kilometers on domestic routes and subject to thorough audit of safety records, though.
The paper also suggested third party airport lounge development model for achieving wider customer base. Utilization of excess space at major airports should be encouraged for convention centres, entertainment centres and others.
Projects should also be initiated for better road and rail connectivity to air cargo terminals to improve cost accosts and time efficiency of the cargo operations.