Why Govt’s Decision On FDI In Aviation Is A Victory For Ratan Tata

Admin 23-Jun-2016 12:46:15 Inothernews

Why Govt’s Decision On FDI In Aviation Is A Victory For Ratan Tata


Officially at least, Ratan Tata, patriarch of one of the country's wealthiest business families, retired in late 2012. In reality, he has been a driving force behind Tata's bet on airlines and a rare public campaign to open up the booming aviation sector. The $100 billion Tata group conglomerate is a major beneficiary of the decision last week to open up aviation in India, making it easier for start-ups to fly overseas sooner. The decision is no panacea for Tata, whose airlines - Vistara and AirAsia India - have had a slow start in a competitive market dominated by IndiGo, owned by InterGlobe Aviation, and Etihad-backed Jet Airways, both of which opposed the rule change. But it marks a victory for 78-year-old Ratan Tata, and ends more than two years of airlines lobbying, of Twitter rows and of frequent public statements from the usually circumspect steel-to-salt group.



"This was a David-and-Goliath kind of situation," said a source close to Tata group. "There was huge lobbying from the other side."

Ultimately, sources familiar with the talks said, it was Ratan Tata, a trained pilot, who was key to sealing the deal, capitalising on his clout.

In a message earlier this year, he called for "a new open market economy" and said airlines lobbying against a rule change was "reminiscent of protectionist and monopolistic pressures by vested interests' entities who seem to fear competition."

A spokesman for Tata Sons, which promotes the group, denied Ratan Tata was directly involved, saying he had "nothing to do with operations or management of either of the airlines" after his retirement, and that views he expressed were personal.

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Vistara, which has 11 aircraft, had an original plan to scale up to 20 by June, 2018, but could speed that up.

"We do not rule out accelerating the deliveries or procuring more aircraft from leasing firms, manufacturers or, for that matter, from our parent Singapore Airlines also," Vistara CEO Phee Teik Yeoh said.

Yeoh said the company was reviewing its international plans.

AirAsia is in the process of ramping up its aircraft to 20 from six to meet the criteria, AirAsia India's CEO Amar Abrol said, adding that the airline lobbied hard for the removal of the 5/20 rule.

India is the world's fastest-growing aviation market, clocking more than 20 percent growth last year, and CAPA expects domestic passenger travel to grow to 500 million by 2035 from 70 million in 2015.

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