India has revamped its civil aviation policy.
Besides making domestic air travel more affordable, the government has tweaked a controversial rule that required an airline company to have five years of domestic operational experience before flying international.
The 5/20 rule has now been partially scrapped. An airline doesn’t have to complete five years of domestic operation before flying on international routes. However, it still must have at least 20 aircraft or 20% of its fleet, whichever is higher, serving the domestic sector if it wants to go global. The new policy would make it easier for India’s new carriers—Vistara and AirAsia India—to start flying on international routes.
For long, new entrants have been seeking a change to the existing 5/20 rule. Established players such as Air India had, however, vehemently opposed the idea.
Other significant changes in the policy announced today (June 15) include capping the fare of one-hour long flights at Rs2,500 and Rs1,500 for half-an-hour flights. The government expects cheaper fares to boost regional connectivity, and help increase the number of flyers in the country.
Currently, just 2% of India takes to the skies, while the Narendra Modi government wants to build India into the world’s third-largest aviation market by 2022. According to aircraft makers Boeing and Airbus, India is expected to order over 1,600 aircraft over the next 20 years.
Stating the intent behind the new policy, civil aviation minister Ashok Ganapathi Raju tweeted the government’s vision for the sector.
Meanwhile, the new policy sparked a spike in the stocks of India’s publicly-listed airlines.