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.
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.
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