London Finance partner Sidanth Rajagopal recently spoke with Airfinance Journal on the fast-growing Indian aviation sector and one of its main impediments to growth, the 5/20 rule. The rule states that to be able to fly internationally as an Indian carrier, the airline must be five years old and have at least 20 aircraft in its fleet. Some industry heads believe it acts as a protectionist rule for the government-owned flag carrier Air India.
"The 5/20 rule is a bit irrelevant now, because you have so many airlines that can fly internationally," said Rajagopal, who has acted for Indian airline SpiceJet. "You have the low-cost carriers doing the most lucrative routes. Vistara and AirAsia are the ones that can’t do it. Air Costa can’t do it, but all of these guys would love to do it because of where they are."
He added, "You’re not using the aircraft for the distance it’s made for. If you opened it up, those slots would get used by the Indian carriers. The market would open up, and everybody can try and have a go. There is no rationale behind the 5/20.”
Rajagopal closed the article in saying, "I hope the rule is abolished, but right now you can’t say. With India, it’s the good thing and the bad thing – they are consistently inconsistent on decisions in aviation. There’s so many things that can be fixed in the industry today if the government had the will to do it."
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