Tata Group, Singapore Airlines entry good news for passengers

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SummaryCompetition will bring down sky-high fares by breaking the kind of cosy cartel that seems to exist.

The announcement of the proposed Tata-Singapore Airlines venture was a big surprise and is great news—first for the passengers, second for the aviation community, and then, for the country.

Passengers first, because competition will bring down sky-high fares by breaking the kind of cosy cartel that seems to exist, and simultaneously improve quality of service and product offerings. It is good news for the gloomy aviation sector. It will create more direct and indirect employment where thousands of trained pilots, aviation engineers and technicians are languishing without jobs and this will give a fillip to the ancillary industries like maintenance, repair & overhaul (MRO), ground handling, catering, etc, across the country. Finally, it is going to give a boost to the economy. When new airlines get launched, frequencies improve, new city-pairs are discovered and connected, and cities and towns in remote areas are brought into the aviation network. This will give an impetus to tourism and also push investments to the backward areas in the hinterland. And it is also fitting that, viewed against a historic backdrop, Tatas are back in aviation—who can forget that JRD Tata, a great aviator, pioneered civil aviation in this country and founded Air India.

But the announcement, while it cheered the public but may not have gladdened the competitors, has brought to the fore a few important issues that must be debated and addressed.

Tata-SIA first attempted a foray into aviation 15 years ago. The government, or the party at the helm of affairs, then had torpedoed the proposal. Given that it was a Tata-backed venture, it was sacrilege. Ratan Tata went on record that he was asked to bribe someone in the civil aviation ministry to get a licence even though the Foreign Investment Promotion Board (FIPB) had cleared it. While the government and politicians of the day bore the ignominy of preventing the very company that pioneered aviation in India to form a new venture, what is tragic and ironic and glossed over is that a private airline, which today is running helter-skelter to stitch together its own FDI with a Middle East carrier, lobbied hard and used all means to block the Tata-SIA venture, conveniently forgetting that it was itself an offspring of reforms which broke the monopoly of Indian Airlines and ushered in a new era in Indian aviation.

Now, this raises serious questions. Why do we still need a licence to start

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