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‘Scrapping 5/20 rule will open up skies’

Asanna Gonmei |

The Air Passengers Association of India (APAI) was established in 1990 and has its headquarters at Chennai. A National Executive Committee supervises the operations. The Association has regional offices in Mumbai, Delhi, Chennai and Nagpur as well as area offices at Madurai and Trivandrum. A non-profit organisation, APAI has been raising concerns of air passengers from time to time for the last 25 years with the Directorate General of Civil Aviation and Ministry of Civil Aviation. The national president of APAI, D Sudhakara Reddy, in an e-mail interview spoke about how the proposed regional connectivity scheme can become a success and on the issue of overpricing of air tickets. Excerpts:  

Q: Despite all the passenger-centric decisions taken by the ministry, the cancellation charges still remain too high. Have you raised this issue?

A: With the new Civil Aviation Requirements (CAR)-3 regulations likely to be notified, cancellation charges are high due to the fact that the Directorate General of Civil Aviation has combined both the base fare and fuel surcharge. It should have taken a percentage of both the base fare and fuel surcharge. We have taken up this issue with both the DGCA and the Ministry of Civil Aviation. We are hoping for an early resolution leading to reduction in cancellation charges.

Q: Are you in favour of dynamic pricing of air fares?

A: APAI, as an association favouring the healthy growth of the aviation sector, is not in favour of dynamic pricing. Air fares must be determined by the market forces and not by any regulatory mechanism.

Q: The Ministry of Civil Aviation does not want to regulate airfares. The reason that is set forth is that only 0.3 per cent of the air tickets are overpriced. Do you subscribe to this?

A: Yes, we do subscribe to this.  The passengers feel that the tickets are priced very high when they go to book at the last minute. This is true all over the world and airlines have a yield management software which determines the pricing. In fact, there are instances where the tickets at the last minute are even cheaper due to the load factor of that particular flight in any sector and by any airline. It is true that only 0.3 per cent of the air tickets are overpriced. The Ministry of Civil Aviation should not regulate the air fares and leave it to the market forces.

Q: Can the way airports function change if foreign entities like Changi Airport are involved in operations and management?

A: It will certainly change the entire scenario in any given airport if a committed, proven entity like Changi Airport is involved in operations and management.  This is mainly because today barring five airports, all the rest are managed by AAI, where there is certainly a lack of commitment and accountability. It is unfortunate that the government has still not been able to clear the way for foreign entities like Changi Airport, Fraport, Airports Company South Africa (ACSA) or for that matter any other airport operating company to take over the operations and management of at least four to six airports. The Union government must pave the way for changing the rules and hand over at least four airports — Chennai, Kolkata, Jaipur  and Ahmedabad — to foreign entities as early as possible to help change the way the airports are managed and maintained.

Q: Air Passengers Association of India supported the revocation of the 5/20 rule meant for international operations. How is it going to benefit the passengers?

A: The Government of India, under the leadership of Narendra Modi, has been advocating dynamic growth in the civil aviation sector. The scrapping of 5/20 rule is a part of liberalisation and gives more choice for passengers flying overseas. The number of seats offered by our domestic airlines will increase substantially and this will automatically reduce the air fares to overseas destinations. The best example is the big four in USA (American Airlines, United Airlines, Delta Airlines and Southwest Airlines) fighting against the various Gulf carriers who have taken over a major market share by offering better connectivity, attractive fares along with most modern aircraft to several destinations in USA with a hub & spoke arrangement.

There will be significant growth in the civil aviation sector after the scrapping of 5/20 rule and it will also contribute towards growth in tourism in addition to helping the ease of doing business. Once our domestic carriers start flying more frequently to overseas destinations, it will automatically lead to improved connectivity as most of the domestic airlines have a vast network across India.

Q: Will the regional connectivity scheme benefit passengers in the long run?

A: The RCS is a highlight of the new civil aviation policy and will certainly enable large sections of the population to take to flying.  To make the scheme a bigger success and a reality, the Centre must insist that the states provide connectivity by road, as only then will passengers from remote areas find flying affordable, safe and convenient.

Regional connectivity will be a great success if the last mile connectivity is provided and licences are given only to operators who have deep pockets. Every applicant should not be permitted to get a licence. It is a matter of time that real low cost fares are available to all sections of society. If our Railways can carry 8.4 billion passengers in a year, why can’t the airlines carry 300 million in a year within the next five to seven years as the compounded annual growth rate of air passengers is likely to be 20 per cent. At present, 80 million passengers are carried by the airlines.