Tata Group today called for abolishing the controversial 5/20 norm for local carriers, saying the rule has only "benefited foreign airlines" and its removal would help "improve" India's air connectivity with the world.
Tata Sons, the major holding companies of diversified Tata Group -- which holds stakes in new airlines Vistara and AirAsia India -- said claims that airfares would go up if 5/20 norm is removed is "specious and unfounded".
Under the 5/20 norm, only those domestic carriers having five years of flying experience and having at least a fleet of 20 planes are allowed to fly abroad. This makes Vistara and AirAsia ineligible to have flights overseas.
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"The claim that air fares in India will go up as a result of removing the 5/20 rule is specious and unfounded. Not protectionism, but increased competition within the country will further contribute to lower prices and greater accessibility of air travel to common people," Tata Sons said in a statement.
Coming out strongly against Ratan Tata's pitch to scrap 5/20 norm for airlines, the Federation of Indian Airlines today said the removal of the rule would lead to higher airfares and result in "reverse discrimination".
The statement bt Tata Sons comes days after Tata Group Chairman Emeritus Ratan Tata accused older carriers of lobbying and using "monopolistic pressures" to retain preferential treatment under the 5/20 rule.
"Keeping the national interest in mind, Tata Sons believes that the 5/20 rule must be abolished if Indian aviation is to achieve its full potential and improve India's connectivity with the world," the statement said.
It said there are no global parallels to this rule, which is "discriminatory" to Indian airlines as foreign airlines that do not meet these criteria are allowed to operate in Indian skies but domestic ones cannot enjoy reciprocal rights.
"The 5/20 rule has thus far principally benefited only foreign airlines who have captured 70 per cent of the international traffic with India, taking Indian jobs and revenue with them.
"This has also resulted in poor utilisation of bilateral air traffic rights by Indian operators," the statement said.
According to Tata Sons, removal of the rule is estimated to boost international traffic to and from India to over 100 million passengers by FY 2021, compared to 43 million in financial rule 2014.
"Majority ownership and effective control of both airlines are with the Indian parties...Further, all the important decisions concerning the day-to-day operations of the airlines are taken by the management teams of these airlines under the overall supervision, control and direction of the respective boards of directors (which include a majority of Indian nationals)," the statement said.
Boards of AirAsia India and Vistara are chaired by Tata veterans -- Ramadorai and Bhaskar Bhat, respectively, it added.
