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Tuesday, December 2, 2014

Impact of New Rules on Air Ticket Fare

Technologies used in the aviation industry, including ingeniously designed engines, navigation tools and in-flight amenities have been replaced with new ones. Earlier, most of the metro cities were served by various airlines, but now flights to Bhopal, Varanasi, Lucknow and many other II as well as III tier cities can be availed as well. In addition to this, management strategies have also been revised to meet the dynamic market challenges and this is the reason that some changes are needed in aviation rules also. Although, a number of new regulations have been introduced, but old ones can also be seen revised in the coming months.

In response to issues regarding licences to Malaysia-based AirAsia and soon to be launched Vistara for global operation, the Federation of Indian Airlines (FIA) commented on the 5/20 rule. As per this rule, every airline set up in India needs to have a fleet size of at least 20 aircraft and must complete 5 years of operation, then only licence for international operation will be given to it. However, FIA, formed back in 2006 by Air India, SpiceJet, GoAir, IndiGo and Jet Airways, resisted this policy and said that it needs to be changed. A few months back, this law was asked to be waived off, but the Directorate General of Civil Aviation (DGCA) kept it intact.

However, one of the DGCA ministers said that no other country follows this rule; hence, it can be removed from the list pre-requisite conditions. The relevance of this law has been lost because of increased safety standards and application of the latest technologies as well as attempt of global operators to cater niche markets of various countries. The Associate Chambers of Commerce (ASSOCHAM) also released a paper mentioning that this policy of government has no logic in the current market scenario. This policy was drawn almost a decade back, and many new carriers have entered in the industry since then, as well as the country has undergone significant changes regarding air travel demands, since then. Today, air ticket fare is almost half of what it used to be 10 years back.

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