SpiceJet, AirAsia, other airlines’ spat over 5/20 norm intensifies

5/20 norm bars airlines from overseas ops till they have a fleet of 20 & 5 yrs experience

The fight between incumbent airlines comprising Jet Airways, SpiceJet, Indigo and GoAir and newer ones like AirAsia and Vistara over the 5/20 rule intensified on Wednesday with both sides accusing each other of hurting national interest.

While the Tata Group on Wednesday issued a statement countering the charges levelled by the grouping of four a day earlier, the latter once again retaliated.

Responding to the allegation that it violated the foreign direct investment guidelines for the sector by vesting substantial ownership and control in the hands of their foreign partners, Tata Sons strongly refuted the charge.

“Tata Sons would like to emphasise that both its joint ventures with Air Asia and Singapore Airlines are fully compliant with the requirements of Indian regulation.

Majority ownership and effective control of both airlines are with the Indian parties as per the requirements of press note 6. Further, all the important decisions concerning the day-to-day operations of the airlines are taken by the management teams of these airlines under the overall supervision, control, and direction of the respective boards of directors (which include a majority of Indian nationals),” the statement said.

The Tata Group, which has stakes in AirAsia and Vistara called for abolishing the controversial 5/20 norm for local carriers, saying it has only “benefited foreign airlines” and its removal would help “improve” India’s air connectivity with the world.

The 5/20 norm bars airlines from starting overseas operations till they have a fleet of 20 aircraft and five years of domestic flying experience which will effectively keep out Vistara and AirAsia India. The four private carriers want the norm to continue.

The Federation of Indian Airlines (FIA), which comprises IndiGo, SpiceJet, Jet Airways and GoAir, criticised the alleged lobbying by the two new carriers for removal of 5/20 norm, saying it was in the “self-interest” and not in “national interest” of the two carriers.

“FIA is deeply disturbed by the statements issued by Tata claiming to be in national interest but effectively in self-interest,” FIA said in a statement.

“They (Vistara and AirAsia) claim to be Indian Airlines and so it is puzzling that they now do not wish to serve the Indian civil aviation growth story and be a part of India’s future growth. They only wish to, it appears, serve their self-interest and establish themselves in India in order to fly International,” it said.

“The claim that air fares in India will go up as a result of removing the 5/20 rule is specious and unfounded. Not protectionism, but increased competition within the country will further contribute to lower prices and greater accessibility of air travel to common people,” Tata Sons said in a statement.

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First published on: 25-02-2016 at 00:56 IST