Air India not to oppose scrapping of 5/20 rule
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In a notable change of stance, Air India has decided not to oppose the scrapping of the ‘5/20 rule’, making it easier for the government to abolish the law.
In a recent meeting with the civil aviation ministry, Air India chairman and managing director Ashwani Lohani said the airline would not oppose the proposed scrapping the rule.
Under the 5/20 rule, an airline should have operated for five years and have at least 20 aircraft in its fleet to fly international routes.
The draft civil aviation policy had proposed to abolish the rule and replacing it with a credit-based system. The policy will be taken to the Cabinet next week.
Civil aviation minister Ashok Gajapathy Raju and minister of state Mahesh Sharma, too, had said their ‘personal opinion’ was that the rule be scrapped.
Abolition of the rule will be a game changer for Indian skies, hugely benefitting new entrants such as Vistara and Air Asia.
Earlier, Air India had strongly expressed its reservation about doing away with the rule and sent a detailed note to the ministry saying it was not in the carrier’s interest.
“I fear that the sudden withdrawal of the protection of 5/20 Rule might be the proverbial last nail in the national carrier’s coffin without bringing any significant benefit to the nation,” Rohit Nandan, then chairman of Air India, had written to the government.
Air India reported a loss of Rs 5,547.47 crore in FY15. Nandan retired on August 31, 2015, after which Lohani took charge.
“It is easier for the government to do away with the rule with the Air India now supporting it,” said a civil ministry official.
Older private airlines such as IndiGo, Jet Airways, Spice Jet, which have already fulfilled the criteria are also not in favour of scrapping of the regulation.
The Federation of Indian Airlines (FIA), a lobby group which counts the above airlines among its members, had earlier written to Prime Minister Narendra Modi saying scrapping the rule would give foreign airline-controlled entrants an advantage.
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