Regulator dismisses objections to Tata-SIA air permit

The Directorate General of Civil Aviation (DGCA) on Wednesday rejected objections against granting an air operator’s permit to Tata-SIA Airlines Ltd, a joint venture between the Tatas and Singapore Airlines to set up an airline in India.

“We had received six objections against Tata SIA Airlines. We have disposed off all. With this, the company’s application for an air operator’s permit has been held valid. The permit will be issued as soon as all requirements are met,” said a senior official in the directorate who did not wish to be named.

The application for an air operator’s permit will be considered after an order by the Delhi high court that is hearing a plea against permitting foreign direct investment (FDI) in airline start-ups in India. The order is due July 11.

HURDLES APLENTY

• The application will be considered after an order by the Delhi High Court that is hearing a plea against permitting FDI in airline start-ups in India
• The order is due on July 11
• The first objection was over allowing FDI in airline start-ups
• The second set of objections relate to ownership and control of the airline remaining in Indian hands

There were two board objections against Tata-SIA Airlines getting an air operator’s permit. The first objection was over allowing FDI in airline start-ups. “The issue is before the Delhi High Court. The Foreign Investment Promotion Board  has clarified that FDI will be permitted in greenfield airlines. It was not in our jurisdiction to decide on the issue,” the official said.

The second set of objections relate to ownership and control of the airline remaining in Indian hands. “Tata-SIA Airlines have said the chairman of the airline will always be an Indian and will be appointed by Tata Sons. They have also assured us that even if the board is reconstituted in future, two-thirds of the directors will be Indians appointed by Tata Sons. Effective control will therefore remain in Indian hands,” said another official who did not wish to be named as well. Tata SIA Airlines is headquartered in Delhi and has a three-member board comprising two Indians, chairman Prasad Menon and director Mukund Rajan. The other director Mak Swee Wah is a citizen of Singapore.

The company is in the process of completing the paperwork required for grant of an air operator’s permit. It will also have to demonstrate its preparedness for flying commercially. The airline expects to take to launch operations this September.

The Directorate General of Civil Aviation had on May 6 sought comments from industry stakeholders regarding the grant of  an air operator’s permit to Tata SIA Airlines.

The regulator had said at the time the company’s application would be considered 30 days after the  issue of the  public notice and disposal of objections.

Tata Sons had partnered Singapore Airlines on September 19, 2013, to launch a full-service airline in India with an initial investment of $100 million.

The Tatas will have a 51 per cent stake in the airline. Singapore Airlines will own the the rest for $49 million.

The airline has made Delhi its operational hub because of the capacity constraints at the Mumbai airport. Tata SIA has said it would like to operate international flights from India depending on government approvals. Government rules do not allow domestic airlines less than five years in operations and with a fleet of less than 20 aircraft to start international operations. The ministry has drafted a cabinet note to change the policy. The Tatas have a partnership with Malaysian carrier AirAsia for a low-cost airline, which commenced operations on June 12 in India.