Mumbai: Ratan Tata, the Chairman Emeritus, Tata Sons, is crying foul over an existing aviation policy that requires new airline companies to fly in India for five years and have a fleet of at least 20 airplanes before becoming eligible for international routes.
Tata is right in pointing out that the rule does not make any sense in allowing an airline to bleed in the domestic markets, with 20 aircrafts in tow for a period of five years. Given high competition in the industry, very few older airline companies, operating purely as a domestic player, are profitable. And that is the reason most airlines want to fly on the profitable international routes and cross-subsidise the losses in their domestic operations.
But SpiceJet promoter Ajay Singh justifies the rule, saying every airline, including his, had to go through five years of labour pain before being allowed on international routes.
While the tussle between Tata and Singh has once again revived the debate on industrial protectionism through government policies, it is clear that older companies that were made to follow the rules are expecting even the new players to toe the line in the name of level-playing field.
To Read the News in Full 22/02/16 Shishir Asthana/Business Standard
Tata is right in pointing out that the rule does not make any sense in allowing an airline to bleed in the domestic markets, with 20 aircrafts in tow for a period of five years. Given high competition in the industry, very few older airline companies, operating purely as a domestic player, are profitable. And that is the reason most airlines want to fly on the profitable international routes and cross-subsidise the losses in their domestic operations.
But SpiceJet promoter Ajay Singh justifies the rule, saying every airline, including his, had to go through five years of labour pain before being allowed on international routes.
While the tussle between Tata and Singh has once again revived the debate on industrial protectionism through government policies, it is clear that older companies that were made to follow the rules are expecting even the new players to toe the line in the name of level-playing field.
To Read the News in Full 22/02/16 Shishir Asthana/Business Standard
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