Airline News
India’s DFC model to be scrapped
July 6th 2015
The Economic Times last week reported India’s Ministry of Civil Aviation has initiated a process to scrap the country’s controversial Domestic Flying Credit (DFC) model, which was proposed as replacement for the so-called 5/20 rule. Read More » The 5/20 rule required an airline to have at least 20 aircraft and five years of domestic operations before it could apply for international traffic rights.
"It does not make any sense to replace one regulation by another. Instead of simplifying it, we will only complicate it. The DFC model is being reviewed and is likely to be junked because it does not make any sense," a civil aviation ministry official who did not want to be identified told the newspaper. The government will examine at a simpler alternative to the 5/20 rule, he said.
The International Air Transport Association (IATA) termed the DFC a "step in wrong direction" and an policy that goes against making the Indian market attractive for foreign investors. Start-ups, including AirAsia India and Vistara, have advocated scrapping the 5/20 rule. However established carriers such as Air India, IndiGo Airlines, SpiceJet, Jet Airways and GoAir have urged the government not to do so, claiming any such move would be "detrimental" to their interests and the Indian aviation sector in general.
To this end, AirAsia India chief executive, Mittu Chandilya, last week told Reuters his carrier would not lease any more aircraft until the government clarified its position. The Chennai-based carrier had planned to induct a new aircraft into its fleet every month from March, but will now stick to the five A320s it flies to eleven domestic destinations. "We've said ‘let's have a wait and see approach’. There were promises about achieving some clarity on that before we launched [in June 2014]," he said, and added he “hasn't seen anything from this government that is about open skies and free markets."
