Mumbai, July 10: Bombay House is holding its breath, awaiting yet another weekend date on Saturday with the centre, hoping that its fulfilment of all norms announced by the powers-that-be on June 11 will probably, finally, push through a favourable decision on its December 26, 1997 application for a domestic private airline.The Tata buildup to the meeting has been focussed on establishing two crucial facts: first, that there is no link between Tata Airlines and any foreign airline, and second, that the already submitted proposal fulfills every guideline issued less than a month ago by the Directorate General of Civil Aviation and those issued by the cabinet on April 1, 1997.
The centre will decide on the project on Saturday amid sundry protests from political lobbies that a decision in favour of the private sector will hurt the government-owned Indian Airlines (IA).
When political fancy takes flight, frustration fractures corporate dreams. This is the fourth union government to chew over the pros andcons of the project, which has passed through the decision-making wringer of the Narasimha Rao, Deve Gowda, Inder Kumar Gujral and Atal Behari Vajpayee governments, and yet failed to spark off a decision.
The Rs 1,475-crore project is expected to bring in more than $80 million in foreign investment, and create 2,400 highly-skilled jobs over the next five years. Not a project any government -- let alone four consecutive ones -- -would like to stall, you would think.
Yet, the government has refused to be wooed into a decision, frustrating the country's largest private sector group to the point where it has told the centre that it is not possible for the company to provide more clarifications about its plans than already provided.
Why has the project been blocked so far? Above board, two major reasons have been provided:
Singapore Airlines was originally associated with the project, as a promoter. It was feared that a crucial strategic area, civil aviation, would be conceded to foreign hands if theproject went through.The Tatas have since taken out Singapore Airlines from their equity plans, submitted a totally new scheme, and replaced SIA with potential institutional holders who include a state institution of Singapore, but not that country's national carrier.
SIA's technical assistance will, however, be sought if the project is approved. Foreign equity worth Rs 278.3 crore in local currency will still come, accounting for 40 per cent of the Rs 695.7-crore equity. None of this will be held by any foreign airline directly or indirectly.
Second reason for blocking the project has been the fear that the market may not prove large enough for IA and Tata Airlines.The second point has led to claims and counter-claims by the Tatas and IA. The Tatas have sought to use figures provided by the civil aviation ministry to disprove the theory that the market may not have enough space for them.
According to ministry figures, domestic fleet would have to increase by 47 125-seaters to meet futurerequirements, whereas the Tatas plan seven aircraft of 140 seats by the end of the first year of operations, and a total of around 18 aircraft in five years.
This would imply a 12 per cent market share, and the Tatas feel that they would not cause overcapacity or threaten other airlines operating in the country.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
