The IndiGo Story: Inside the Upstart that Redefined Indian Aviation

by Shelley Vishwajeet

There were some important regulatory developments too that had taken place prior to IndiGo-commenced operations. In 2004, the government announced a policy called 5/20 Rule,78 which stipulated that private airlines had to complete a minimum of five years of flying and had to have a fleet size of at least 20 aircrafts to be eligible to get permission for international operations. In spirit, the 5/20 Rule was somewhat similar to Japan’s 45/47 Rule in the 1970s and 1980s whereby the government had reserved certain domestic and international routes for its national carrier. Similarly, the 5/20 Rule had deep implications for fair competition. It provided a safety net to government airlines in lucrative international operations. It also gave a protective cushion to early licensees, such as Jet Airways, from immediate competition and provided them monopolistic control over international routes. By 2005, two private airlines—Jet Airways and Air Sahara (Sahara Airlines had rebranded itself as Air Sahara in 2000)—had been given the permission to fly to international destinations. One of the main reasons for Kingfisher going down was the fact that it was in a tearing hurry to start international operations, believing it to be its panacea for its financial woes while also being driven by the prestige of it. Thus, it stretched itself financially to acquire Air Deccan in 2008 which by then had become eligible for international operations by virtue of its birth in 2003. The price paid by...