Tata Airline Proposal In Tune With Policy: Govt
The government has conceded that the Tata Airlines proposal is "perfectly in tune" with the existing aviation policy but is undecided on how to address the snowballing political opposition to it both within the ruling coalition and outside. The proposal cannot be faulted on technical grounds, said senior government sources.
However, the political storm unleashed by forces opposed to the project has caught the government off-guard and the approval to the project may be delayed till August 22 as the next two Saturdays on which the Foreign Investment Promotion Board meets, are holidays.
The sources hoped that the protest by MPs may die down by then. Some 40 MPs had met Prime Minister Atal Behari Vajpayee last week and expressed concern about the future of Indian Airlines if the Tatas were allowed to set up an airline.
After their proposal was shot down last year, the Tatas have modified their project report. They now propose to invest 40 per cent equity and give the balance to several domestic and foreign investors. Singapore Airlines, the original partner in the project, has been kept out.
The MPs had protested that some of the foreign investors may have links with Singapore Airlines. However, in subsequent meetings Tata executives are understood to have proved to Civil Aviation ministry officials that Singapore Airlines was not in any way involved in the project.
At a meeting last week, Tata chief Ratan Tata is learnt to have told civil aviation minister Ananth Kumar that the proposal had been modified to fit in with the current policy.
Highly placed sources said the chief of a private airline was had met senior officials and politicians here last week to lobby against the Tata proposal and how the entry of a powerful player like the Tatas could make the industry sick.
The industry has suffered a slowdown since this financial year largely due to the slowdown in the economy. Indian Airlines' seat factor has fallen by about five per cent and other players, Jet and Sahara too have not fared much better.
The Tatas intend to start off with a modest fleet of six aircraft going up to 18 in about two years time. A study by Tata Consultancy Services in 1996 had projected a steady yearly passenger traffic growth of 12 per cent, good enough to provide optimum seat capacity to all existing players and the new entrant.