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Chamber urges Delhi to end rules that give Air India first refusal rights

THE Indian aviation sector could grow normally if restrictive rules like 5/20 and First Right of Refusal to Air India on international routes were eliminated, says a report from the Associated Chambers of Commerce and Industry of India (ASSOCHAM).

With the sharp fall in fuel prices, the Indian aviation sector needs to replace or rework the 5/20 Rule in order to equip Indian commercial airline operators with long-term financial security and international quality standards.

The paper suggests that revisiting this rule will provide incentive for new players to enter the market given the opportunity to enhance revenues, yields and ultimately, profits, reports newKerala.com of Thiruvananthapuram.

The ASSOCHAM study talked of optimising bilateral agreements and international traffic rights. It also emphasised undertaking a higher number of routes, especially in the US and Europe.

"Air India's First Right of Refusal on new routes should be relooked at with the objective of private airlines getting opportunities to expand their international routes," the ASSOCHAM paper said.

ASSOCHAM secretary general DS Rawat said there are situations where fast growing airlines have certainly acquired a large fleet offering top service but may not have completed five years.

The award of overseas operations licences should be linked to completion of certain number of hours/kilometres on domestic routes and subject to thorough audit of safety records.

The paper also suggested third party airport lounge development model for achieving wider customer base. Use of excess space at major airports should be encouraged for convention centres, entertainment centres and the like.

Projects should also be initiated for better road and rail connectivity to air cargo terminals to improve cost accosts and time efficiency of the cargo operations, said ASSOCHAM.