While Vistara is another airline that stands to benefit from the new policy, besides AirAsia India — in which, too, the Tata’s have a stake — the airline did not issue any statement.
The policy has recast what is called the 5/20 norm — that is an airline must have five years of domestic flying and a fleet of 20 aircraft to qualify to fly abroad.
The policy cleared by the Union Cabinet has done away with the first five-year wait, but airlines will need 20 aircraft or fly 20 per cent of their total capacity on domestic routes.
“The National Civil Aviation Policy is a progressive one and as a nation we are one step closer to strengthening and growing aviation in India,” said Amar Abrol, Cheif Executive of AirAsia India.
“Though a 0/0 or 0/10 would have been more than welcome, the amendments that have been made to the policy are encouraging.”
Abrol added that the airline would now focus on aggressively investing in India and increasing its fleet size from six to 20 aircraft.
“The growth in aviation has a cascading effect on the economy and AirAsia will contribute to this economic growth in India,” Abrol added.
Leading industry chamber the Associated Chambers of Commerce and Industry of India (Assocham) pointed out that the new policy is a turning point for India’s civil aviation sector, as it frees the operators from the shackles of 5/20 rule for flying overseas.
“The step would surely attract more investment in the aviation which in any case had become quite viable after a sharp correction in the fuel prices,” said D.S. Rawat, Secretary General, Assocham.
Dhiraj Mathur, Partner – Aerospace and Defence, PwC said that by amending the 5/20 rule the policy will increase competition in the market.
“As far as amendment to 5/20 rule is concerned, it should attract new entrants. The requirement of 20 aircrafts is reasonable because one, this issue was holding up the release of the policy and the government has taken a call,” Mathur said.
“Second, one can’t start international operations with one or two aircrafts. This will not only augment supply and increase investment in the sector in India but will also create more choice for our consumers.”
According to Mathur, the five year clause was irrational as it constrained Indian players.
“In any case, a complete new entrant with no experience will hardly be able to start international operations, so only somebody who ties-up with an existing player would be able to do so,” Mathur added.
“Admittedly, existing private airlines have been disadvantaged by this rule but something that is irrational must go sooner rather than later.”
The 5/20 norms had bitterly divided the Indian airlines sector, as older airlines that are eligible to fly abroad opposed the government’s decision to abolish the 5/20 rule.
The eligible airlines made representations to the government under Federation of Indian Airlines (FIA) banner.
They highlighted that the proposed exemption of 5/20 rule will amount to injustice to the existing airlines.
Whereas, several aviation research institutions such as the Centre for Asia pacific Aviation have described the 5/20 rule as being damaging, discriminatory and anti-competition, besides preventing carriers from optimal fleet utilisation and expansion.