New Delhi: It has been almost 48 hours since the New Civil Aviation Policy was cleared by the Cabinet but the incumbent airlines have maintained a deafening silence over its pronouncements. The dilution of the 5/20 rule, which now allows any new airline to begin international operations as soon as it has a fleet of 20 aircraft without waiting for five years, is surely a key irritant for IndiGo, SpiceJet, Jet Airways and GoAir. These airlines have never kept their vehement opposition to any change in the 5/20 rule a secret and have, in fact, lobbied hard against any change under the aegis of the Federation of Indian Airlines (FIA).
The 5/20 rule was brought in allegedly at the insistence of one powerful full service airline years ago, so that this airline got immunity from competition from desi competitors on lucrative international routes. Now, when all airlines except GoAir fly abroad after having suffered the five-year domestic operations' condition, they are wary of the might of respected international players like Singapore Airlines, which is a 49% partner in Vistara, and would surely help the new airline's international spread.
International operations are lucrative for airlines since they enable better sweating of assets (utilisation of aircraft) and enable airlines to pick up cheaper jet fuel from abroad. Take the case of Jet Airways, which earns over half its revenues from international operations and may face the maximum impact from 5/20 dilution a few years down the line.
17/06/16 Sindhu Bhattacharya/First Post
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The 5/20 rule was brought in allegedly at the insistence of one powerful full service airline years ago, so that this airline got immunity from competition from desi competitors on lucrative international routes. Now, when all airlines except GoAir fly abroad after having suffered the five-year domestic operations' condition, they are wary of the might of respected international players like Singapore Airlines, which is a 49% partner in Vistara, and would surely help the new airline's international spread.
International operations are lucrative for airlines since they enable better sweating of assets (utilisation of aircraft) and enable airlines to pick up cheaper jet fuel from abroad. Take the case of Jet Airways, which earns over half its revenues from international operations and may face the maximum impact from 5/20 dilution a few years down the line.
17/06/16 Sindhu Bhattacharya/First Post
