New Delhi: Strongly opposing proposed changes in international flying norms for Indian carriers, leading airlines body FIA today said that such a move would “vitiate” the existing level-playing field and only favour new entrants. The Federation of Indian Airlines (FIA) — comprising IndiGo, Jet Airways, SpiceJet and GoAir — also said that domestic airline industry operates in a high cost and constrained environment.
In a letter to Prime Minister Narendra Modi today, the FIA has raised several issues concerning the sector and has sought a meeting to discuss the same. “At a time when the incumbent airlines are committed to high cost domestic networks due to the 5/20 rule and the RDG (Route Dispersal Guidelines), the removal of these rules will vitiate the level playing field that exists in Indian civil aviation,” FIA letter signed by IndiGo promoter Rahul Bhatia said.
Besides, the FIA noted that any relaxation in 5/20 norm would “tectonically shift in favour of foreign airline- controlled new entrants, who have shown peripheral interest in serving the Indian domestic market”. The move assumes significance as the Ministry of Civil Aviation is in the process of formulating a new Aviation Policy where relaxations are expected on 5/20 norm as well as changes in RDGs.
Under 5/20 rule, domestic airlines are required to have at least five years operational experience and minimum 20 planes to fly overseas. FIA said that “at least one of the two new entrants has stopped its expansion in the domestic market beyond the mandatory requirement of five aircraft.” Vistara and AirAsia India are the two new scheduled airlines.
“It is our understanding that the Indian government proposes to relax the RDG as well as the 5/20 rule for international access. We wish to clarify that the increase in domestic connectivity over the years is solely attributable to the 5/20 rule, working in tandem with RDG,” the letter said. Noting that the airline industry in India operates in a high cost and constrained environment, FIA said that airport monopolies both in private and public sector are creating infrastructure constraints.
“On the infrastructure front, airlines continue to face constraints for night parking bays and slot at all major airports in India… Operating costs also continue to remain high, despite our repeated requests over the years to provide relief to the industry.
“Pricing of Aviation Turbine Fuel (ATF), as fixed under the purchase price parity model, is higher than what it should be, and ad valorem sales tax levied by state governments makes it even more expensive,” FIA said.
FIA emphasised that it is “disheartening to see that the Indian government might be planning to take steps that favour new entrants, which are established and controlled by foreign airlines under the relaxed FDI and oversight norms approved by the erstwhile UPA government”.
Besides, the grouping said that only a few state governments have recognised the value of air connectivity and provided some relief to the airlines by selectively lowering taxes on ATF. “Maintenance, Repair and Overhaul facilities within India continue to be overpriced, owing to central taxes and levies, resulting in outflow of foreign exchange on this account, as well as reduced resource availability for the airlines, adding to their overall cost of operations,” it added.
Stressing that India is one the most under-penetrated aviation markets in the world, FIA said the airline industry has a very important role in fostering the country’s economic growth. “India has a fleet of 422 aircraft for a population of approximately 1.2 billion. In comparison, China has a fleet of 1,981 aircraft for approximately 1.3 billion,” it added.
