Ratan Tata accuses older airlines of 'monopoly'

Top industrialist Ratan Tata on Sunday locked horns with a group of airlines batting for continuation of a rule that prohibits newbies from operating international services, saying such “protectionist and monopolistic” pressures arise from a fear of competition.

Lauding the Civil Aviation Ministry for considering the removal of the 5/20 Rule, Tata said that it was “sad” to see some airlines lobbying for “protection and preferential treatment for themselves” against new airlines.

Tata’s strong remarks on the rule — which allows a domestic airline to start international operations only after completing five years and having a fleet of 20 aircraft — came as the Federation of Indian Airlines met Union Home Minister Rajnath Singh to press their demand for the continuation of the rule.

These airlines had to go by the rule, and they do not want new airlines like AirAsia India and Vistara to get the option to fly abroad without going through the rule. Tata Sons owns a majority stake in Vistara, while it has minority stakes in low-budget AirAsia India. “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 with open economies that have thrived on competition overseas,” Tata said in a statement posted on Twitter.

“One hopes when the new (aviation) policy is introduced, it will be free of discrimination and protectionism, so that Indian aviation can grow for the benefit of the consumer and the common man and not to serve the interests of select beneficiaries of protectionism,” he said.

Responding to Tata, rival SpiceJet’s Chairman Ajay Singh said that he should ask Vistara and AirAsia to serve India, before getting to fly international. According to him, all airlines were asked “to serve our great country, before we got profitable rights to fly abroad”, under the 5/20 rule.

“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,” Singh was quoted by PTI as saying.