5/20 rule: Indian players should be serving Indian skies, says Aviation Minister

The minister spoke on varied issues from the regional connectivity scheme to the rationale behind Rs 2,500 cap on per hour flights on unconnected routes.

Written by Sunny Verma | Updated: June 22, 2016 3:01:03 am
Ashok Raju, Civil aviation minister, Vijay Mallya, Kingfisher, Kingfisher airlines, liquor baron, business news, india news, latest news CIvil Aviation minister Ashok Raju (Source: File photo)

While reviewing the much-debated 5/20 rule (5 years of domestic experience and minimum 20 aircraft) for domestic carriers wanting to fly international, the government decided to replace it with 0/20 regime only to ensure that Indian carriers first serve the country, Union Minister for Civil Aviation Ashok Gajapathi Raju said.

In an interview with SUNNY VERMA, days after announcing the National Civil Aviation Policy, the minister spoke on varied issues from the regional connectivity scheme to the rationale behind Rs 2,500 cap on per hour flights on unconnected routes.

Edited excerpts:

What is your feedback on replacing the 5/20 rule for international flying by 0/20 norm?

People who are interested in the 5/20 (rule), they have asked why have you kept 20 and removed the 5? The feeling is that Indian players should be serving the Indian skies, because theoretically in the past, a person could have 20 aircraft and under the Indian flag fly to other countries and not serve in India. We don’t want what has happened in shipping — flags of convenience of so many countries — we would like Indians to serve India. So that was one of the things, and we felt that around 20 would be a reasonable number. By and large even the industry i.e. the airlines appear to have taken it well, so that’s a good sign.

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Are the states positive about the regional connectivity plan?

The inquiries have come. You see what bothered the airlines, and their request was, that the ATF (Aviation Turbine Fuel) should come in the GST. But then, in the Finance Minister’s conference, they decided to keep petroleum and liquor out. The states wanted it that way. So we have seen states where they have brought down the tax on ATF to a reasonable level, activity have gone up there. I have written to all the chief ministers requesting them to bring it down.

Is there an apprehension that Rs 2,500 fare cap may discourage regional flights?

On this, there is a little arbitrariness in the Rs 2,500 but, why has it come? Roughly 30 per cent of India’s people are middle class, but if you see the ticketing, it gives the impression that they are flying once in five years. And this could be reduced to once a year in the next five years. There are two main hurdles to lower ticketing: availability of airport and the price. On the other side, it was generally felt that new routes take about two years to staibilise. So the viability gap funding to give airline two strings of revenue: the passenger and the VGF. We want to have scheme in a transparent way to connect the unconnected. Now 30 plus airports are already non-functional, these would probably be the low hanging fruits, provided it is in commercial area. So, I think the smaller aircraft here will have a role.

Why did you drop plans for auctioning additional bilateral traffic rights?

These air service agreements, which are done from country to country, they are done on a level of equality. Now what is happening is that certain countries are able to perform and we are not able to perform, this is apparent, our own players, whether they are private or public were not performing. But there is demand on one side for additional seats, and this problem of performance is there on the other side. What the thing is now when these air service agreements come to 80 per cent of the performance, both on our side and the other side, then the aviation department will sit and negotiate seats. But if it’s lopsided, because it cuts across various ministries, we figured that a transparent way is required, because there were a lot of things that came in the past where people said it was not transparent at all, and it appeared to us like that because certain things didn’t make economic sense. Anyway, now India offers good number of destinations, those countries that have benefited out of this, do not offer that many destinations… so this hiccup was there. For me it’s a good thing, the headache is transferred (to a panel to be headed by the Cabinet Secretary).

So till then, will you put on hold Dubai and Qatar’s demand for additional traffic rights?

They have been requesting and our thing was if our Indian players can come up to particular level, we can’t kill them, it’s not as if they want destinations where they are already operating. They say that they want to expand in India. I have nothing against Indians expanding in India, because our Indian players have a duty to serve the Indian skies. They have no obligations to serve Indian skies, neither we can regulate the foreign players are foreign players — they have made the whole world their hub and the whole world their spoke, they have deep pockets, it’s ok. You have deep pockets, good for you, but I would like our players to contribute to our GSDP.

What is your view on the Comptroller and Auditor General (CAG) wanting to audit AAI’s earnings from Delhi International Airport Ltd?

CAG is entitled to do that. AAI has to gather whatever information they have from them (DIAL) and provide it to the CAG. You see governmental procedures are different. Private fellows are different…If it comes to us, we will tell them why don’t you provide necessary information. AAI is the auditee.

Will you consider disinvestment in Air India?

Probably, you can. Air India is beautiful airline to my mind, whose books are really bad. Wherever they have cohesively worked, they have delivered. Even in Yemen, they worked and evacuated Indians. Somehow the impression I get — this is the first year I think when it hasn’t made an operational loss, which is good — if they work as a team, they can come out. But in the present shape, unless something is done, like liabilities are moved out or something, I don’t think anyone will interested in buying.

With the airline having around Rs 50,000 crore of debt?

If you have that (kind) of money, you can start a new airline. You can do whatever, if you can raise that kind of thing (money). So it doesn’t look practical, but I wish I am wrong. There are certain things you observe and still wish you are wrong.

Air India played good role during exigencies?

It makes sense to have a (government-owned) airline but I can’t commit the taxpayers money for eternity. In fact, on the floor of Parliament I said that I am not one of those who believe in Air India bashing. I don’t.

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