Ratan Tata attacks older airlines, says they are afraid of competition.
Says they are resisting liberalising of rules in the sector; older rivals hit back.
New Delhi | by BS Reporter | Feb 22, 2016 11.12 AM IST.
Ratan Tata, the chairman emeritus of the Tata group of companies, says older airlines in the country are afraid of competition and are stymying progress in the sector.
This comes in the wake of lobbying by some of the bigger airlines against some of the proposed changes in the civil aviation policy. Notably, relaxation of the existing “5/20” rule on plying abroad. This says an airline cannot be eligible to do this till it is at least five years old and has at least 20 aircraft.
Vistara, an airline in which Tata Sons owns 51 per cent stake, is one of those which wants a relaxation in this and like rules, saying these are important for the country’s economic growth.
Tata said on Sunday, “The lobbying for discriminating policies between old and new airlines is reminiscent of the protectionist and monopolistic pressures by vested interests’ entities who seem to fear competition, as in a variety of other sectors over the years. These protectionist moves have held back progress in India, compared to open economies that have thrived on competition overseas.”
This sparked a statement from Ajay Singh, the chairman of SpiceJet: “Mr Tata should ask these airlines in which his group is a shareholder to follow Indian law in letter and spirit. It is evident that these airlines are controlled by their foreign parents, in violation of Indian laws.”
Adding: “While obtaining a licence, these two airlines had undertaken to follow the “5/20″ rule, which they are now opposing so vehemently.”
AirAsia group Chief Executive Officer Tony Fernandes, however, lauded Tata. “I’m so glad that he has spoken out, no country in the world has ‘5/20’,” Fernandes said.
Top executives of IndiGo, SpiceJet, Jet Airways and GoAir had, under the Federation of Indian Airlines (FIA), recently met Jitendra Singh, minister of state in the PMO, opposing abolition of the “5/20” rule and urging for a law against ownership of foreign entities in Indian airlines.
They complained that no other country in the world allows substantial ownership and effective control of its airlines to be taken over by foreign ones but India has permitted some to operate despite being effectively controlled by a foreign parent.
“It is nothing wrong to ask for regulations which favour your own company but Mr Tata, who represents Indian business, should take a look at his own company which is being remote controlled from overseas. There is deep resentment in their own staff against this,” said an executive from another airline which is a part of FIA.
AirAsia, another airline in which Tata Sons owns 41 per cent stake, has been in a controversy over foreign control after co-founder Arun Bhatia, who owns 10 per cent in the airline, threatened to go to court on the grounds that it was controlled by Malaysian shareholders.
(This article was first published on Business Standard).