First National Civil Aviation Policy emphasizes on three objectives:
1. Allowing new domestic airlines to fly abroad quickly. According to a 2004 norm, which is also known as the ‘5/20 rule’, a domestic airline is allowed to go international only after flying for five years to domestic destinations and operating at least 20 aircraft.
New airlines, such as Vistara and AirAsia, will no longer have to wait for five years before starting operations on international routes. Start-up airlines can now fly abroad after operating at least 20 planes or 20 per cent of their total flying capacity, whichever is higher, on domestic routes.
View of Airline industry on introduction of 0/20 rule:
a. Old airlines feel that they have been brought at power with new airlines by scrapping 5 year condition.
b. New airlines said that replacement of 5/20 with 0/20 was a non-event. It is not going to benefit new players as they cannot scale up immediately to be eligible to fly international. It should have been 0/0.
2. India will have an open-sky policy for countries beyond the 5,000-km radius from Delhi on a reciprocal basis. This means that airlines from European or SAARC countries will have unlimited access, in terms of number of flights and seats, to Indian airports, leading to increased flight frequencies with these countries.
3. Enhancement for regional connectivity:
a. As a part of its regional connectivity scheme, passengers will be charged Rs. 2,500 for an hour’s flight on regional routes by the airlines. The ceiling on airfares will be proportionate to the flying hour. For instance, airlines will charge passengers around Rs. 1,200 for a 30-minute flight and around Rs. 1,800 for a 45-minute journey.
b. Domestic airlines will be required to provide more flights to the north-eastern region, Jammu and Kashmir, Andaman and Nicobar Islands and Lakshadweep as the route dispersal guidelines have been amended to add six more sectors to the metro routes. As per the guidelines, on such north-eastern and other routes, airlines are mandated to fly 10 per cent of their total capacity they deploy on metro routes.
c. The government has grand plans to revive 50 airports in the next two years through the regional connectivity scheme.
Views of airline Industry on Airfare ceiling and increase of flights to non-profitable routes:
With so many regulations in place, it has defeated the very purpose of privatisation. The restriction on airfares will lead to losses for airline industry.
Moreover, the government is trying to promote air connectivity between tier-3 cities, but airline will find find it difficult to carry assets (aircraft, manpower and equipment) to loss-making routes.