The Cabinet on Wednesday approved partial abolition of the 5/20 rule, paving way for new carriers like Vistara and Air Asia to start international operations sooner.
The new Civil Aviation Policy released on Wednesday say the government has decided to scrap a requirement that mandated airlines to have five years of domestic oeprations to be eligible to fly overseas.
However, an airline will have to allocate 20 aircraft or 20% of their total fleet of aircraft, whichever is higher, to the domestic sector if they wish to fly overseas. It means a carrier must have a minimum 20 aircraft in its domestic fleet.
“This is to ensure that any new airlines starting business in India should essentially serve the remote parts of the country,” a ministry official said.
Mahesh Sharma, Minister of State for Civil Aviation, had dropped hint about this proposal in the past. “In place of 5/20, we can make it 3/10 or 3/12. We have also looked at options like 0/10 and 0/20,” he had said.
In February, Tata Group Chairman Emeritus Ratan Tata had accused older carriers of lobbying and using “monopolistic pressures: to retain preferential treatment under the 5/20 rule.