Monday, October 07, 2013

‘Changes to 5/20 rule will boost air traffic from India'

 Mumbai, Oct 7: 

International air traffic from India could cross the 100 million mark by 2021 if changes are made to the current rule that debars airlines from flying abroad unless they complete five years of service, according to a report by Centre for Asia Pacific Aviation (CAPA).

5/20 rule

Terming the rule, known as 5/20 in aviation parlance, as one of the “most damaging and discriminatory regulations’’, the aviation advisory and research firm argues that the financials of several Indian carriers would have been stronger if they were allowed to launch international routes earlier.

The 5/20 rule, which also requires airlines to have a fleet of at least 20 aircraft, does not apply to foreign carriers owing to which they have captured a larger share of the international market at the expense of home carriers.

“It could also be argued that Kingfisher’s demise can be traced back to the challenges associated with the integration of Air Deccan, an acquisition that was motivated by the desire to circumvent the 5/20 rule,” the report said.

India’s global traffic

India’s international traffic is expected to approach 50 million passengers by the end of fiscal 2014. If the current regulatory framework were to continue unchanged, India’s international traffic is expected to reach 96 million by fiscal 2023.

“Low-cost carriers are expected to be the key drivers of international growth, especially if the 5/20 rule is lifted. This will result in particularly strong capacity expansion on routes to the Gulf, and South and Southeast Asia,” CAPA said.

Recent news reports have suggested that the Indian Government is contemplating a change in the 5/20 rule.

(This article was published on October 7, 2013)

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