Patel opposes proposal to dilute airlines' substantial control

Former Civil Aviation Minister Praful Patel today strongly opposed NDA government's proposal to hand over substantial control of Indian airlines to foreign carriers, terming the suggestion "ridiculous" and saying such a move, if approved, would harm national interests.
Patel, during whose tenure the civil aviation policy was formulated, also stressed that the government should not be seen to be favouring select Indian carriers while bringing in a new policy and instead ensure a level-playing field for all of them, while continuing the "time-tested" route dispersal guidelines to ensure air connectivity across the country.
Asked about the proposal to raise the FDI cap in airlines from 49 to beyond 50 per cent, he said "all over the world, the issue of substantial ownership and effective control (of an airline) is very minutely scrutinised" as aviation industry is different from any other and is affected by several factors including external.

"I am surprised that the draft aviation policy carries a provision to increase the FDI limit over 50 per cent. That is ridiculous. You have already done 49 per cent. 50 per cent or more will hurt the country," Patel told PTI.
He said the United States does not allow more than 25 per cent voting rights by foreigners in an airline's board, while in Malaysia and Singapore, "you may not be allowed to buy into their airlines ... Do these countries have reciprocal policies (on FDI in airlines)?"
"If the country's carrier has to carry the Indian flag, its foreign ownership cannot be 50 per cent or more. It (increasing the existing FDI limit) will hurt the country," he said, adding that an airline that carries the national flag on its tail has to be substantially owned by Indians.

Stressing the need for having national flag carriers, he said "this template also goes against the spirit of the ICAO resolutions".

The UN body ICAO (International Civil Aviation Organisation) has evolved a series of rules and procedures on various aspects of the aviation industry business which are being followed by all governments and their airlines.
Patel, during whose tenure the 5/20 rule was brought in by the then Union Cabinet, at the same time said that "I don't think the government is interested in favouring any airline".
"The new carriers are the ones interested in change of these rules. They knew these rules when they came in," the former Civil Aviation Minister said.

The government has now proposed to either completely do away with 5/20, continue with it or tweaking it. Abolition of the rule is being sought by new airlines Vistara and AirAsia India, but the older airlines have opposed it strongly.
Observing that the government has not spelt out any formulation regarding this rule but given all three options to either continue with it, modify it or do away with it, he said it shows that the government was "obviously concerned that there is a need to have a policy which provides some kind of level-playing field for all airlines".
Patel also wanted the 20-aircraft criteria to remain, saying currently, Air India and Jet Airways deployed at least 90 aircraft each of their 100-plus fleets on domestic routes, while IndiGo, SpiceJet and GoAir also flew a substantial number of their planes within the country.

"So the 20-aircraft fleet norm is not sufficient. It is not a big number and in fact, it should be more," he said.
Patel said the route dispersal guidelines (RDG) should be respected as it was "already time-tested".
The RDG, which the government now wants to revamp into a credit-based system, mandate airlines to fly to economically unviable but socially important routes connecting cities in the north-eastern region, Jammu & Kashmir, Andaman & Nicobar Islands and Lakshadweep.