AirAsia India (Bengaluru International) has put its ambitious expansion plans on hold as it awaits the Indian government's decision concerning the future of the contentious 5/20 rule. New Delhi is considering replacing the rule (an airline must have been in service for at least 5 years and operate at least 20 aircraft before applying for international traffic rights) with a credit-based scheme in which airlines earn the right to venture abroad by first plying domestic routes.
Mittu Chandilya, the Chief Executive Officer (CEO) of the AirAsia (AK, Kuala Lumpur International) subsidiary, told Reuters in an interview last week that the LCC will not lease any more aircraft until government clarifies its position. Launched in June last year, AirAsia India operates five A320-200s on flights to eleven destinations locally.
"We've said let's have a wait and see approach. There were promises about getting some clarity on that before we launched," he said. "I haven't seen anything from this government that is about open skies and free markets."
The carrier had planned to induct a new aircraft into its fleet every month from March thus allowing it to dramatically expand its coverage into the largely underserved Tier II city market.
Though start-ups such as AirAsia India and Vistara (Delhi International) have advocated for the scrapping of the rule, established airlines such as Air India (AI, Delhi International), IndiGo Airlines (6E, Delhi International), SpiceJet (SG, Delhi International), Jet Airways (Mumbai International), and GoAir (Mumbai International) have urged Narendra Modi's government not to do so claiming any such move would be "detrimental" to their interests and the Indian aviation sector in general.
