<p>Continuing indecision on the part of the government over the demand for scrapping of what is called the 5/20 rule is not in the interest of the country’s civil aviation industry and air travellers. The rule mandates that an airline should have a minimum of five years of domestic flying experience and 20 aircraft in its fleet before it is given permission to operate international flights. Tata group chairman Ratan Tata has recently criticised the rule as favouring older airlines and hurting the growth of new operators. The Tata group has stakes in two new airlines and so it is easy to consider Ratan Tata’s demand for scrapping the rule as only an attempt protect the group’s business interests. But that does not show that the demand is devoid of merit. The arguments in favour of dropping the rule are much stronger than those that favour retaining it.<br /><br />The reason for laying down the rule was that airlines should acquire adequate experience and have a record of safety and financial strength if they should fly overseas. But when it was prescribed during the time of the UPA I government, there was criticism that it was meant to protect existing airlines. The aim of the rule continues to be that even now. It is discriminatory against new airlines and denies them a level playing field. International and national operations require the same kind of security, efficiency and service and therefore, the distinction between them is difficult to understand. The government should allow competition among the players without prescribing any conditions. When a new airline has the ability, expertise and willingness to operate overseas flights, why should it be banned from doing so? About 70% of the passenger traffic from India now goes to foreign carriers.<br /><br /> Customers will benefit from such competition in terms of cheaper fares, better service, wider choice and improved connectivity. The 5/20 rule also discourages foreign airlines from investing in Indian companies and developing partnerships with them. If an airline fails to offer good services, the customers will punish it. India’s civil aviation industry has seen a lot of shake up, failures and mergers. After a rapid expansion, it had suffered a setback some time ago but is again consolidating and growing now. India has the ninth largest aviation market in the world now and is even expected to become the largest in another 15 years. The government should provide it with the right policy and regulatory environment to grow and not hamper its growth.</p>
<p>Continuing indecision on the part of the government over the demand for scrapping of what is called the 5/20 rule is not in the interest of the country’s civil aviation industry and air travellers. The rule mandates that an airline should have a minimum of five years of domestic flying experience and 20 aircraft in its fleet before it is given permission to operate international flights. Tata group chairman Ratan Tata has recently criticised the rule as favouring older airlines and hurting the growth of new operators. The Tata group has stakes in two new airlines and so it is easy to consider Ratan Tata’s demand for scrapping the rule as only an attempt protect the group’s business interests. But that does not show that the demand is devoid of merit. The arguments in favour of dropping the rule are much stronger than those that favour retaining it.<br /><br />The reason for laying down the rule was that airlines should acquire adequate experience and have a record of safety and financial strength if they should fly overseas. But when it was prescribed during the time of the UPA I government, there was criticism that it was meant to protect existing airlines. The aim of the rule continues to be that even now. It is discriminatory against new airlines and denies them a level playing field. International and national operations require the same kind of security, efficiency and service and therefore, the distinction between them is difficult to understand. The government should allow competition among the players without prescribing any conditions. When a new airline has the ability, expertise and willingness to operate overseas flights, why should it be banned from doing so? About 70% of the passenger traffic from India now goes to foreign carriers.<br /><br /> Customers will benefit from such competition in terms of cheaper fares, better service, wider choice and improved connectivity. The 5/20 rule also discourages foreign airlines from investing in Indian companies and developing partnerships with them. If an airline fails to offer good services, the customers will punish it. India’s civil aviation industry has seen a lot of shake up, failures and mergers. After a rapid expansion, it had suffered a setback some time ago but is again consolidating and growing now. India has the ninth largest aviation market in the world now and is even expected to become the largest in another 15 years. The government should provide it with the right policy and regulatory environment to grow and not hamper its growth.</p>
