The groundswell for change has been growing within the policy-making set-up too. Over the past year and a half, the ministries of finance and corporate affairs as well as the Planning Commission have repeatedly stated that there is no logic to the policy. In January last year, a study commissioned by the ministry of corporate affairs unequivocally said the barriers to international operations were anti-competitive because they limited the number or range of suppliers and reduced their ability and incentive to compete. As the report pointed out, fleet size requirements incur a large start-up cost for domestic airlines and the policy also left domestic operators worse off at a time when foreign operators' services to and from India were steadily expanding. Most importantly, the report said, the policy "biases the market towards big airlines which already have economies of scale. Furthermore, this rule incentivises mergers". The report suggests that a better criterion to set would be financial viability - a sensible idea, as passengers stranded overseas when Kingfisher abruptly closed operations will testify. Global safety norms should be the other benchmark, and it is worth remembering that it is state-owned Air India, with extensive overseas operations, that has been lax in this regard, not domestic private airlines.
It is possible that the ministry is moving cautiously on grounds that a change in policy is being effected just as AirAsia and Singapore Airlines are scheduled to make their domestic debut via tie-ups with the Tata group. So it runs the real risk, especially in the current political climate, of being accused of favouring these entrants. Indeed, barring Wadia-owned GoAir, all the major domestic airlines now meet the criteria for international operations. But the existence of this stipulation on the rule books does little for India's already tattered global reputation for doing business.