The Competition Commission of India (CCI) has advocated the abolition of the minimum eligibility criteria for Indian carriers to launch international services and said that the norm is acting as an impediment for the Indian aviation sector.
According to the regulation,every Indian carrier needs to complete five years of flying in the domestic space and needs to have a fleet of 20 aircraft to launch international operations.
One of the major impediments to domestic airlines launching international services is the five year/20 aircraft rule,a restriction that does not apply to foreign airlines. Once this rule is relaxed,the contestability of the Indian aviation sector is likely to increase and make the Indian aviation sector more competitive, CCI said in its order clearing the stake sale by Jet Airways to Etihad.
Meanwhile,the civil aviation ministry has started the process of abolishing the five year/20 aircraft rule.
The process to prepare the Cabinet note to abolish the minimum eligibility criteria is on. The general view is that it should be completely abolished but a final call has not been taken yet, said a senior civil aviation ministry official. He added that this policy change will require the approval of the Cabinet.
It has been reliably learnt that the abolition of minimum eligibility for international flying is first on the agenda of civil aviation minister Ajit Singh.
Singh is believed to have told his officials that the abolition of international flying norm,making Air Navigation Services a separate company and creation of an aviation force are the three things to be done before the Lok Sabha elections scheduled to be held in 2014.
The abolition of this rule will benefit GoAir,which has completed more than five years of operations but does not have a fleet of 20 aircraft yet,and two new airlines that are being launched.
The two new airlines are being launched by AirAsia with Tata Sons and Arun Bhatia of Telestra Tradeplace and Singapore International Airlines (SIA) with Tata Sons as the majority partner.
Centre for Asia Pacific Aviation (CAPA),in its report on Indian aviation in October,had also said that the minimum eligibility criteria rule has been one of the most damaging and discriminatory regulations in India.
This regulation has enabled foreign airlines to capture a larger share of the international market at the expense of home carriers. The financials of several Indian carriers would likely have been stronger,if they had been allowed to launch international routes earlier,as this would have reduced excess capacity in the domestic market and improved aircraft utilisation, the CAPA report said.