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    Older carriers allege Vistara and AirAsia India flouting norms, hit out against abolishing 5/20 rule

    Synopsis

    The older carriers say overseas stakeholders, AirAsia Bhd and Singapore Airlines, are managing the two airlines, in contravention of the rules.

    ET Bureau
    NEW DELHI: Two days after Ratan Tata’s complaint that older carriers were lobbying for protection against newer airlines, his rivals launched a strong joint counterattack, accusing the Tata Group of not conforming to guidelines.

    AirAsia India and Vistara, in which Tata Group has stakes, were set up in the past two years. The older carriers say overseas stakeholders, AirAsia Bhd and Singapore Airlines, respectively, are managing the two airlines, in contravention of the rules, which stipulate that control has to be local in nature.

    IndiGo founder Rahul Bhatia said: "They are subverting the law of the land."

    SpiceJet Chairman Ajay Singh said the group "is wilfully allowing them (overseas stakeholders) to break Indian law".

    In response to an ET query, a Tata Sons spokesperson said, "Our stand on these issues is crystal clear, and our airlines are fully compliant with all legal requirements."

    On Sunday, Tata said the older airlines were lobbying for protection and preferential treatment for themselves against the new airlines. He specifically called for the abolition of the rule that requires Indian carriers to have been operating for five years and have 20 planes before being able to fly overseas. The Tata Group owns 51 per cent of Vistara and 41 per cent of AirAsia India.

    Older airlines want the 5/20 rule retained or want its abolition twinned with scrapping of Route Dispersal Guidelines, which mandate Indian carriers to fly so-called uneconomic routes.

    In a joint briefing on Tuesday, Bhatia and Singh along with top executives of Jet Airways and GoAir called for a "level playing field" in aviation.

    When the Tata Group decided to venture into aviation, the law was very clear on the 5/20 norm and on effective control, Bhatia said. Singh said the Tata Group wasn’t running AirAsia India and Vistara." Is Ratan Tata willing to give an undertaking that the effective control of these two airlines is controlled by his group? Will he give an affidavit to that effect?" Singh asked. The question of effective control had also been raised by one of the partners in AirAsia India — Arun Bhatia of Telestra Tradeplace.

    Arun Bhatia has previously told ET that decisions about AirAsia India were being taken in Malaysia, where the Tony Fernandes-led AirAsia Bhd is based.

    The older carriers say the government should not remove the 5/20 norm to benefit two new carriers as this would give them an unfair advantage. The long-delayed aviation policy that the government is planning to unveil will abolish the stipulation, it has been reported.

    IndiGo’s Rahul Bhatia said the government should then consider scrapping Route Dispersal Guidelines, which compel them to deploy about 30 per cent of their total domestic capacity on non-profitable routes that are poorly served.

    "You cannot remove 5/20 without removing Route Dispersal Guidelines (RDG)," Bhatia said. "Policy-making is government’s job and if the government is going to tweak 5/20, they should also remove RDG to make it equal for everyone." Both 5/20 and RDG are unique to India, he said.

    Bhatia argued that RDG guidelines were loaded against the incumbent airlines while letting off the new airlines floated by Tata Group and its foreign partners lightly. "Both are inextricably linked...You cannot look at 5/20 in isolation," he said.


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