Govt not to relax 5-yr rule for airlines flying abroad

The oral proposal to reduce the number of years of domestic flying from five to three years for airlines to qualify for international operations has been given a quiet burial. An alternative is, however, being found for Kingfisher Airlines, which is determined and ready to fly overseas from April 2008.

Top aviation ministry sources said owing to an aggressive lobbying by industry players, stiff opposition to alter the rules had developed and several members of Parliament had raised the issue at the highest levels.

Last month, a letter by Communist Party of India (CPI) General Secretary A B Bardhan to the prime minister argued that since airlines are "carriers of our flag and prestige", only those with sufficient experience (that is, five years) should be allowed to go overseas.

Others opposing the move contend that the present annual capacity deployed between India and the rest of the world is 39 million seats in both directions and most airlines operating into and out of India have an average seat factor of around 70 per cent, leaving ample room for any foreseeable traffic growth.

It has also been argued that adding new carriers from India will worsen the already-congested skies and airports. Ministry sources said no further meeting of the group of ministers (GoM) was on the cards to consider the issue, and a senior official told Business Standard that the GoM had gone into the "bottom drawer".

As things stand, sources said, the present rules would continue "" that is five years of domestic operations before an airline can go overseas.

Any dispensation from this will be on a case-to-case basis.

This would have been a direct victory for Jet Airways, which has been lobbying hard to keep competition from players like Kingfisher (versus Jet itself) and Deccan (versus the newly-acquired Jetlite) at bay were it not for the fact that the ministry is considering an alternative way for Kingfisher to fly overseas.

Under this plan, Air Deccan is to apply to the Directorate General of Civil Aviation (DGCA) for permission to fly overseas (the routes applied for will include the Gulf, South-East Asia, USA and Europe) later this month.

The permission will be granted on the premise that since Air Deccan's aircraft operating permit was issued in January 2003, it completes five years by January 2008 (though actual flights were launched by the carrier in August 2003). The airline will ask for permission to launch flights from the April 2008 summer schedule.

Once this permission is given, Kingfisher "" which will by then have a majority stake in Deccan "" is expected to use this licence to operate overseas.

Kingfisher Airlines Chairman Vijay Mallya, who now holds 46 per cent in Air Deccan, will acquire a majority stake in the budget carrier through creeping acquisition or incremental purchases from the stock markets and will reconstitute the airline's board, prior to the launch and unveiling of the rebranded Air Deccan on October 15 in Mumbai.

However, it is not clear how Kingfisher will use its wide-bodied A340s on the Deccan licence unless some kind of special dispensation is made in this case.