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Press Release
Press Release

Statement by Tata Sons on civil aviation

February 24, 2016     |     505 words     |     2-minute read

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The Draft Civil Aviation policy was announced in October 2015 and was opened for public comment. Both Tata SIA Airlines (Vistara) and Air Asia India have transparently shared their views on the policy, like other stakeholders

Keeping the national interest in mind, Tata Sons believes that the 5/20 rule must be abolished if Indian aviation is to achieve its full potential and improve India’s connectivity with the world. Apart from the fact that there are no global parallels to this rule, the rule is discriminatory to Indian airlines as foreign airlines that do not meet these criteria are allowed to operate in Indian skies, but Indian airlines cannot enjoy reciprocal rights. Indian carriers are best placed to promote India as a tourism destination and should be encouraged to provide international connectivity if they wish to do so.

The 5/20 rule has thus far principally benefited only foreign airlines, who have captured 70 percent of the international traffic with India, taking Indian jobs and revenue with them. This has also resulted in poor utilisation of bilateral air traffic rights by Indian operators. The removal of the 5/20 rule is estimated to boost international traffic to and from India to over 100mn passengers by FY2021, compared to 43mn in FY2014. This would stimulate the domestic market, and the resultant growth would help all domestic carriers.

With forward-looking policies and steps to reduce the costs of doing business, the airline industry in India is likely to see greater activity and more competition in the years ahead. The impact of the entry of new airlines like Air Asia India and Vistara is already being seen in the superior customer service and on-time performance of these carriers and strong downward pressure on tariffs, all of which serve customer interest. The claim that air fares in India will go up as a result of removing the 5/20 rule is specious and unfounded. Not protectionism, but increased competition within the country will further contribute to lower prices and greater accessibility of air travel to common people.

Tata Sons would like to emphasise that both its joint ventures, with Air Asia and Singapore Airlines, are fully compliant with the requirements of Indian regulation. Majority ownership and effective control of both airlines are with the Indian parties as per the requirements of press note 6. Further, all the important decisions concerning the day-to-day operations of the airlines are taken by the management teams of these airlines under the overall supervision, control and direction of the respective boards of directors (which include a majority of Indian nationals). These boards are chaired by long-time Tata veterans, S Ramadorai (Air Asia India) and Bhaskar Bhat (Vistara).

The Tata group pioneered civil aviation in this country with the establishment of Tata Airlines in 1932, and built it into one of the finest airlines of the world. The Tata group is absolutely committed to helping realise the vision of all forward-looking stakeholders to enhance air connectivity within India, and to bring India and the world closer to one another.