India's Vistara Calls For Free Access to International Routes

Neelam Mathews Nov 4, 2015

Indian domestic carrier Vistara wants to expand its existing fleet of nine A320s to begin international services.
A report by the Center for Aviation (CAPA) commissioned by Indian domestic carrier Vistara has called on India’s government to take a long-term view of the air transport industry’s needs as it finalizes long awaited 
new legislation. “The report, we hope, will form one of the significant inputs the government will take on board before it finalizes what is currently a draft civil aviation policy,” said Dr. Mukund Rajan, a board director with Vistara’s parent company Tata-SIA Airlines at a press conference in Mumbai on October 30.

Vistara’s main concern is that its expansion plans will be undermined if the government does not abolish the so-called 5/20 rule, which obliges airlines to have a minimum of 20 aircraft and five years of domestic operational experience before they can launch international routes. This rule has been in place since October 2004 and India’s major carriers have applied pressure on officials to retain the requirement and so protect their market position. The draft version of India’s aviation policy contains three options: retain the rule; abolish it; or replace with a new version that would determine whether or not operators can fly international routes based on a complex system of credits. Privately, Indian officials have signaled to AIN that they favor abolition, but they remain under heavy lobbying pressure from some airline interests.

 “India is the only country that penalizes domestic carriers for the benefit of foreign operators,” said Vistara CEO Phee Teik Yeoh, who claimed that no other country has an equivalent of the 5/20 rule. He argued that the situation is playing into the hands of rival overseas carriers, such as Gulf-based Emirates and Etihad. “Dubai’s gain is India’s loss…. [and] a transparent allocation of bilateral rights is critical for airlines to plan and deploy capacity,” Yeoh added. As a result, “India’s best airport, Delhi, in world airport ranking is a lowly 40,” he argued.

Vistara plans to add widebodies to its fleet for international expansion once the rule is scrapped, confirmed Yeoh to AIN. The carrier has already announced prospective partnerships with Japan Air Lines and British Airways, and has a code-share agreement with one of its two main shareholders, Singapore Airlines (SIA).

“India needs serious planning in key areas with a focus on reducing cost and ease of doing business, liberalizing the aviation regime and ensuring the regulator's role on safety,” said Rajan. Tata-SIA Airlines chairman Prasad Menon said policy reforms need to be implemented urgently as 98 percent of people arriving in India now come by air. “I am happy the draft policy has been announced. I am sure they have taken into account many points our report suggested,” he concluded. The draft government policy is available on India’s Ministry of Civil Aviation website for three weeks to invite comments from stakeholders.