New Delhi : The civil aviation policy will be a turning point for the sector in attracting more players and will help take flying to the masses, stakeholders and experts said as they welcomed scrapping of the 5/20 international flying norms for local airlines.
“Though a 0/0 or 0/10 would have been more than welcome, the amendments that have been made to the policy are encouraging,” AirAsia India CEO Amar Abrol said referring to the scrapping of 5/20 rule which also benefits the carrier.
The policy gives the airline a clear direction to ramp up our operations in India and grow our business in the domestic segment before we scale our operations to fly international,” he said.
Hail end of 5/20 rule
He also said the airline would focus aggressively in India and expand the fleet size. Another startup carrier Vistara also said it would have preferred a complete abolition of the 5/20 norm to ensure that Indian aviation achieves its full potential.
“It is very encouraging to see that the government has established a policy which promotes the overall growth of the industry. We would have preferred, of course, that the 5/20 rule be completely abolished to ensure that Indian aviation achieves its full potential,” Vistara Chief Executive Officer Phee Teik Yeoh said.
He also said that as a domestic carrier Vistara was committed to its expansion plans in the country and now looking forward to providing connectivity to travellers to/from India.
Industry body Assocham said the policy is a turning point for the country’s aviation sector as it frees the operators from the shackles of 5/20 rule for flying overseas. Under this norm, only those domestic carriers having at least five years of operational experience and a minimum fleet of 20 planes were allowed to fly overseas.
Assocham also said that capping of airfare would propel regional connectivity but it should be ensured that operators are not made to suffer losses on short haul routes.
boost air connectivity
The national civil aviation policy would help take flying to the masses through a slew of policy initiatives and fiscal and monetary support, Amber Dubey, Partner and Head, Aerospace and Defence, KPMG in India said.
“The highly illogical and anti-competition 5/20 rule has been replaced with 0/20, which effectively translates to 3/20 as it will take at least 3-4 years to have a 20 aircraft fleet,” he noted.
Dubey, however, said the policy is unfortunately silent on issues like formation of an independent
Civil Aviation Authority (CAA), privatisation of Air India and listing of AAI.
International Air Transport Association (IATA) officials pointed out that the levy for the regional connectivity fund has been limited to domestic air travel and not on international flights.
IATA’s CEO and Director General Tony Tyler has expressed apprehension that “this levy is going to increase the cost of air travel. It will dampen demand. It is against ICAO principles.”
Former Civil Aviation Minister Praful Patel said the policy is a welcome step. “5/20 replaced by 0/20 is continuity with change as the sector has grown exponentially,” he tweeted.
“How will air and land and regulatory infrastructure handle the phenomenal growth in future not properly addressed,” Patel said.
The Rs 2,500 cap on fares for one hour flights is also conceptually welcome, he said. There are, however, going be lot of challenges in execution and implementation but certainly a beginning has been made, Patel said.
Bradra International India Pvt Ltd’s Director Hiyav Bajaj said that illegal non-entitled entities would not be allowed to operate, since the policy bars contract employees from carrying out ground handling on behalf of the airlines.
“The Ministry has sought to provide a fillip to the sector through putting in place a mechanism for providing transparent viability gap funding for regional connectivity, as well as proposing measures for a segment like MRO,” Peeyush Naidu Partner at Deloitte India said.
According to PwC India’s Partner for aerospace and defence, Dhiraj Mathur, amending the 5/20 rule and measures for improving the regional connectivity are the two key takeaways of the new civil aviation policy.
Airline stocks take off
Shares of Jet Airways India,SpiceJet and InterGlobe Aviation rose 3-5% intraday after Union Cabinet cleared the new aviation policy but ended off highs as the details of the policy were revealed.
Shares of SpiceJet went up by 3.51 % to close at Rs 66.40, InterGlobe Aviation gained 1.90 % to Rs 1,008 and Jet Airways rose by 0.21% to Rs 561 on BSE.
“Almost an end to vested interests. (referring to the government doing away with the 5/20 norm) Power to the people. Well done @narendramodi . You kept your word,” AirAsia Berhad chief Tony Fernandes, who has been vocal against the 5/20 rule, tweeted.
