India’s Directorate General of Civil Aviation (DGCA) has dismissed objections filed against the planed Tata SIA joint venture, setting the stage for the carrier to receive its Air Operators Permit.
In a statement on its web site, the DGCA said that six representations were received after it invited interested parties to express their views about Tata SIA Airlines. Of these, four were against the carrier, and two were for it.
Two objections each were filed by the Federation of Indian Airlines and somebody identified only as “Mr. Jain.”
One objection attempted to make the case that the Tata SIA joint venture is not in the spirit of India’s foreign direct investment rules, which allow overseas parties to own 49% of Indian domestic carriers. It contended that the FDI rule was designed to allow cash injections in existing carriers, not the establishment of new ones.
It also questioned whether control of the new carrier would truly lie in Indian hands.
In response to these objections, the DGCA noted that 51% of the new carrier will be held by an Indian company. Its chairman, who will be appointed by Tata, will be Indian. Tata will also appoint four of its six directors, and SIA just two.
The issue of control revolved around whether Tata will have “substantial ownership and effective control.” The DGCA said that Tata’s 51% stake does, indeed, satisfy its interpretation of “substantial control.”
The objection posed by “Mr. Jain” contended that since foreigners hold a stake in Tata, this effectively pushes the stake of Tata SIA held by Indians below the 51% threshold. The DGCA dismissed details of this objection as “factually incorrect” and therefore not sustainable.
The two filings for the establishment of the new carrier related to the hiring of pilots, and the DGCA said these were not material in regard to the Air Operators Permit.
Tata SIA is a 51:49 joint venture between India’s Tata group and Singapore Airlines. It is based in Delhi, and will focus on key trunk routes in India utilising a fleet of Airbus A320 aircraft.
Source: Cirium Dashboard
