India’s 5/20 rule for airlines “must be abolished”, says Tata

Tata launched Vistara with Singapore Airlines in 2015
Tata launched Vistara with Singapore Airlines in 2015

Tata Sons, the Indian conglomerate that owns stakes in AirAsia India and Vistara, has reiterated its call for the 5/20 rule for airlines to be removed.

The regulation dictates that any new Indian airlines must operate domestic routes for five years and build a fleet of at least 20 aircraft before they are permitted to launch international flights.

But Tata, whose two Indian carriers launched in 2014 and 2015, called the rule “discriminatory”, as overseas airlines are allowed to operate flights to and from India without the same conditions.

“Tata Sons believes that the 5/20 rule must be abolished if Indian aviation is to achieve its full potential and improve India’s connectivity with the world,” the company in a statement this week.

“Apart from the fact that there are no global parallels to this rule, the rule is discriminatory to Indian airlines as foreign airlines that do not meet these criteria are allowed to operate in Indian skies, but Indian airlines cannot enjoy reciprocal rights.

“Indian carriers are best placed to promote India as a tourism destination and should be encouraged to provide international connectivity if they wish to do so.”

Tata noted that overseas airlines have now captured 70% of the international traffic to and from India, “taking Indian jobs and revenue with them”. And it asserted that the removal of the 5/20 rule would “boost international traffic to and from India to over 100 million passengers by 2021”, compared to 43m in 2014.

Tata faces opposition in its bid to get the 5/20 rule removed, however. Incumbent Indian carriers such as Jet Airways, SpiceJet and IndiGo have already abided by the rule and feel that its removal would give AirAsia India and Vistara an unfair advantage.

But Tata argues that claimed that airfares will rise as a result of removing the 5/20 rule are “unfounded”.

“Not protectionism, but increased competition within the country will further contribute to lower prices and greater accessibility of air travel to common people,” it said.

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