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Vistara, the brand name of the joint venture airline between Tata Sons and Singapore Airlines, has based its business model on the fact that the 5/20 rule exists and will continue to induct capacity as it has planned, Prasad Menon the airline’s Chairman, said on Tuesday.
“We had our seventh aircraft come in September; our eighth will come this month and the ninth next month. Exactly as (we had) planned. The ones coming next year will come in exactly as planned. Let me make it clear that 5/20 or no 5/20, we have committed for the long term,” Prasad said at the release of a report on ‘Maximising the contribution of aviation to the Indian economy.’ The report has been prepared by the Centre for Asia Pacific Aviation (CAPA) and commissioned by Tata-SIA Airlines Ltd. The report calls for the abolition of 5 year/20 aircraft rule.
The 5/20 rule stipulates that a domestic airline must have a fleet of 20 aircraft and have completed five years of domestic flying before it becomes eligible for being considered for international flights from India. Vistara and AirAsia India, another start-up airline, have been calling for the removal of the rule while Air India, Jet Airways and IndiGo have been in favour of the rule remaining. The 5/20 rule was approved by the Cabinet in 2004 while Vistara launched flights in January this year.
Prasad said it will be difficult to say which of the existing airlines will go under and which will do well if there is a change in the rules. “The 5/20 is only one issue though it is an important one . What has come out well in this report is that we are also facing a lot of push points in different areas. The report talks about 10 years or less, by which time, many airports will be completely saturated, apart from Mumbai, which is already saturated. So we need to start taking action 6-7 years before that. The infrastructure that leads to all the areas around the airport needs to be constructed. We need to have rail links to new airports. The whole aspect of skilling requires huge numbers, and not just pilots, cabin crew, engineers etc, which needs to be started now. We need to look at the whole issue of the taxation structure. If we are to make aviation a centre-piece of the Indian economy, we need to look at all the issues together. Removing one is not going to change things in a major way,” he pointed out.
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