Tata Clarification Letters Negate Minister'S Claim

Tata Airlines had written to the ministry of civil aviation as early as July 6 clarifying in detail the scope of the technical services agreement with Singapore Airlines and the background of financial investors in the project.

This is contained in a series of letters written by the Tatas to the ministry and foreign investment promotion board (FIPB).

The letters negate the civil aviation minister Ananth Kumar's statement in Bangalore on Tuesday that his ministry had not cleared the Tata Airlines proposal because it had not received clarifications from the Tatas.

In six letters starting from January 12, the Tatas have given the ministry information it requested on two contentious points.

The first one related to the scope of the technical services agreement with Singapore Airlines which was alleged to be making a backdoor entry into the domestic aviation sector through the agreement.

The second disputatious area related to ownership of the proposed financial investors, American International Group (AIG) and the Government of of Singapore Investment Corporation (GIC). The ministry was concerned whether the investors were owned in any way by foreign airlines.

The government's civil aviation policy does not allow foreign airlines, their subsidiaries or associates to own stake in domestic airlines.

Elaborating the scope of the technical services agreement, the Tatas' letters detail the assistance in establishing infrastructure, capabilities, procedures and systems in three broad areas: engineering and maintenanace, flight operations and airline operational systems and procedures.

This, the letter says, is in accordance to the government's policies.

In another letter dated June 18, Tata Airlines has made it clear that it will comply with all guidelines of the director general of civil aviation for foreign equity participation in the domestic air transport sector.

On the proposed participation of AIG and GIC in the venture, the Tatas clarified that they would "select FIIs that do not have foreign airlines as their shareholders."

Also, reacting to a guideline asking for details of directors and shareholding of financial investors, Tata Airlines says it will comply with this norm once the investing FIIs have been finalised.