 "Ajay Singh")
The government’s new civil aviation policy fails home-grown carriers and hubs, says Ajay Singh, chairman of SpiceJet.
“It does nothing to make Indian airlines stronger or boost hubs in the country,” he said.
The policy diluted the ‘5/20’ rule on being allowed to ply abroad, which the entrenched carriers had been opposing, under the umbrella of Federation of Indian Airlines.
“The existing airlines feel it (the change) is discriminatory and felt the new airlines should also adhere to 5/20. The government has gone ahead and changed it; it is their prerogative. The motive should be to strengthen indigenous airlines, to ensure we build hubs inside the country and do not export to West Asia and Southeast Asia,” said Singh.
Asked about the government’s decision to allow foreigners to own airlines in India, he said, “These issues must be dealt with as reciprocal measures. It cannot be that other countries will not allow Indians to own and effectively control airlines there but we allow them to do the same.”
Foreign investors may now have up to 100 per cent stake in domestic carriers. Though the cap on investment by a foreign airline still stays at 49 per cent, a foreign carrier can do it through a group company. The civil aviation ministry is changing the Substantial Ownership and Effective Control norms, following the announcements.
This will increase the competition for Indian carriers, as better endowed airlines from the Gulf will be able to establish here through their group entities, goes the criticism.
Civil Aviation Secretary Rajiv Nayan Choubey said on Thursday that the ministry would amend the existing policy of granting an Air Operator Permit (AOP) to bring it in line with the new Foreign Direct Investment norms. At present, an AOP is granted to a company only if its chairman and two-thirds of directors are Indian citizens; also, ownership and control must be with Indians.
“We have to decide if we want to create our own hubs and airlines or keep exporting to others,” Singh said. Adding that Gulf-based Etihad and Emirates had expanded because of strong backing from their government.
The SpiceJet chief said the growth seen in the sector can continue only through stimulation by low fares. “I believe the principal motive of aviation policy should be to bring down the cost of aviation. The (present) 20 per cent (annual) growth will not continue if you don’t keep the fares low.”
