Ratan Tata, Ajay Singh spar over 5/20 rule for airlines

Our Bureau New Delhi | Updated on January 27, 2018



While Tata backs Ministry’s move, Ajay Singh wants it to be retained

An open fight has broken out between Ratan Tata, Chairman Emeritus, Tata Sons, and Ajay Singh, promoter of SpiceJet, on whether the Centre should remove the 5/20 rule.

The rule states that only those Indian carriers that have a 20-aircraft fleet and have operated in the domestic sector for five years can fly abroad.

In a tweet on Sunday, Tata backed the government and the Ministry of Civil Aviation’s move to remove the 5/20 rule.

“It is sad to see incumbent airlines lobbying for protection and preferential treatment for themselves against the new airlines that have been formed in full compliance with prevailing government policy and providing air transport to Indian citizens in line with the dream of a ‘new India’ promised by the new government under (Narendra) Modi’s leadership,” he said.

By late evening, in response, Singh said: “All of us were asked to serve our great country before we got profitable rights to fly abroad. We served with great pride. What is wrong if these two foreign-controlled airlines are also asked to serve India before being allowed to fly international? Mr Tata, whom we respect greatly, should in fact urge these airlines in which his group is a shareholder, to serve India willingly before being allowed to fly international. While obtaining a licence, these two airlines had undertaken to follow the 5/20 rule, a rule they are now opposing so vehemently.”

‘Protectionist measures’

Tata, in his tweet, added that the lobbying for discriminating policies between old and new airlines “is reminiscent of the protectionist and monopolistic pressures by vested interests’ entities who seem to fear competition, as in a variety of other sectors over the years. These protectionist moves have held back progress in India compared to open economies that have thrived on competition overseas.”

Tata’s tweet comes days after Rajnath Singh, Union Home Minister, chaired a meeting on the new draft civil aviation policy, 2016, which is looking at various issues, including whether the 5/20 rule should be removed completely or be replaced with some other rule.

Tata further tweets that “one hopes when the new policy is introduced it will be free of discrimination and protectionism so that Indian aviation can grow for the benefit of consumers and the common man and not to serve the interests of select beneficiaries of protectionism.”

Tata’s earlier attempts to enter the domestic aviation space had been stalled due to these reasons. During the AB Vajpayee regime, Tata was keen to enter the domestic airline space but abandoned the idea due to stiff opposition from various airlines, and bureaucratic hurdles.

In early 2000, when the then government planned to divest Air India, Tata Sons tied up with Singapore Airlines to bid for the State-owned airline but with the withdrawal of SIA from the venture Tata Sons also gave up its attempts. The government finally decided against divestment.

The domestic aviation industry is divided on the issue of the 5/20 rule. SpiceJet and IndiGo want the rule to be retained, while new entrants, such as AirAsia India and Vistara, have been seeking its removal. Vistara a new domestic airline, is a joint venture between Tata Sons and Singapore Airlines.

Published on February 21, 2016

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