India Said to Plan Easing Rules Aiding Singapore Air, AirAsia

  • India may scrap rule that mandates 5 yrs of local flights
  • Older carriers have opposed proposal, citing unfair treatment

India is planning to ease rules for domestic airlines to start international flights, a move that will benefit the local affiliates of Singapore Airlines Ltd. and AirAsia Bhd., three people familiar with the process said.

Under new rules, local carriers won’t have to wait for at least five years to qualify for an overseas permit, the people said, asking not to be identified as the information isn’t public. The cabinet may consider the new policy as early as Wednesday although an official agenda isn’t ready yet and delays are usual, the people said.

The government is still debating whether to keep the minimum number of aircraft an airline should have in its fleet at 10 or 20, they said. Existing rules mandate that airlines must have a fleet of 20 planes to fly abroad. Mayank Agrawal, a spokesman at the civil aviation ministry in New Delhi, didn’t immediately respond to a call and a text message to his cell phone.

A change will enable carriers to start flying overseas immediately if they meet the minimum fleet requirement, while dealing a blow to airlines such as Interglobe Aviation Ltd.’s IndiGo and SpiceJet Ltd., which had previously opposed such a relaxation of what is locally known as the 5/20 rule. Singapore Air started flying domestic flights in India through a joint venture known as Vistara. AirAsia, the region’s biggest discount carrier, began domestic Indian flights in June 2014.

Monopolistic Pressures

A draft of the new civil aviation rules released in October said the 5/20 rule could be kept, amended or scrapped. India is evaluating as many as 15 variations to amend the rule, R.N. Choubey, the top bureaucrat in the aviation ministry said March 16.

Incumbent carriers like market leader IndiGo and SpiceJet have said scrapping the rule unduly favors new airlines. Iconic businessman Ratan Tata, former chairman of Tata Sons Ltd. that partners both Vistara and AirAsia India, has said the rules were "reminiscent of the protectionist and monopolistic pressures by vested interests’ entities who seem to fear competition"

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