Cabinet Split Over Tata-Sia Airline Revival Proposal

The Union cabinet is divided over whether or not to revive the controversial Tata-SIA airline project. It seems unlikely, despite Prime Minister IK Gujrals public espousal of an open skies policy, that the project will be revived in the near future.

Civil aviation ministry officials are giving priority to the formulation of a policy for privately-operated airports. However, they say it is unlikely that the Tata-SIA project will be revived immediately.

CM Ibrahim, who had scuttled the project in March through a new, restrictive, civil aviation policy, has retained the portfolio in Mondays reshuffle. Although Jayanthi Natarajan is now the minister of state in the ministry, Ibrahim remains in charge.

 

Ibrahim was virtually alone in the cabinet when he pushed the restrictive policy but he appears to have gained support. Another cabinet minister from the Janata Dal said yesterday that there was no question of the Tata-SIA project being revived, at least in the near future.The PMs criticism of the aviation policy does not necessarily mean that the Tata-SIA project will be revived, said the minister..

Another Dal cabinet minister, however, held that the logic of liberalisation meant that the project should be cleared. Private airlines had to be encouraged, he said, since Indian Airlines was unable to fulfil domestic requirements. He held that the only point at issue was to ensure that the nations social needs, such as catering to non-profitable routes in backward areas, were protected.

Rajorshi Roy in Mumbai adds:

Tata sources say they have only heard reports of the Prime Ministers statement on an open skies policy and have not received any formal communication from the civil aviation ministry about any proposed change in the governments thinking.

Although the Tatas were unwilling to react to Gujrals statements, the group, it was learnt, is sceptical about the latest development. There have been so many changes that one can no longer be sure of anything, an industry source said.

The ministry had written to Tata-SIA last month informing them of the decision to reject the proposal for a domestic airline. Following this, Tata-SIA had sought some clarifications, to which the ministry has yet to respond.The clarifications were mainly on how the proposal could be restructured in accordance with the new civil aviation policy.

It may be mentioned that the Tata proposal had been pending with the ministry for nearly two years. The new policy announced earlier this year had disallowed the participation of a foreign airline in a domestic venture, thereby nullifying the Tata proposal that had envisaged a 40 per cent stake for Singapore Airlines.

Besides, the policy had implied that Jet Airways would have to replace the foreign stake held in that company by Kuwait Airlines and Gulf Airways.