India approves new aviation policy

The government of Prime Minister Narendra Modi in India has approved a new aviation policy

16th Jun 2016


India approves new aviation policy


The government of Prime Minister Narendra Modi in India has approved a new aviation policy that says will open up the Indian market, which is currently the world’s fastest-growing air travel market.
 
The government announced that it will permit domestic airlines to fly overseas if they deploy 20 planes or 20 percent of capacity, whichever is higher, on local routes. Previously, Indian carriers had to have a minimum of 20 aircraft in their fleet and five years of domestic services under the so-called 5/20 rule.
 
The new policy should benefit Southeast Asian airlines like Singapore Airlines with its Indian subsidiary Vistara and AirAsia India and may lure Middle Eastern carriers looking to expand their operations.
 
Air travel in India grew more than 20 percent last year, according to the International Air Transport Association (IATA) while air travel in China grew 10 percent. Local air traffic in India increased even faster at more than 23 percent in the first four months of 2016, according to India’s Directorate General of Civil Aviation.
 
“It is a turning point for India’s civil aviation sector as it frees the operators from the shackles of the 5/20 rule for flying overseas”, D.S. Rawat, secretary-general of the Associated Chambers of Commerce & Industry of India, said in published reports. “The step would surely attract more investment in aviation, which in any case had become quite viable after a sharp correction in fuel prices.”
 
AirAsia group CEO Tony Fernandes said on Twitter that the minimum fleet requirement of 20 is “too many”. Another AirAsia official, Amar Abrol, CEO of AirAsia India, said the carrier will “focus on aggressively investing in India and increasing the fleet size”.
 
Analysts said in published reports that the new policy will increase competition for market leader IndiGo and SpiceJet who opposed the new policy. Singapore Airlines’ local venture Vistara and AirAsia, the region’s biggest discount carrier, will clearly benefit from the new regulations.
 
“We need more airlines, more aircraft serving our skies, so if more airlines want to come to India they are welcome,” aviation minister Ashok Gajapathi Raju told reporters.
 
The aviation ministry also announced a complex regional connectivity policy that seeks to connect smaller towns, which it plans to help by capping air fares on those routes and possibly providing subsidies to airlines servicing those routes.
 
“Welcome to the world of affordable, convenient and cheap flying. Please spread the word,” said civil aviation secretary Rajiv Nayan Choubey.
 

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