Say Tata before flying!

Are the happy days here again? Is Tata doing the right thing at the wrong time? This is not the best time to launch another airline in India. The economy is not very conducive and aviation industry is a hard taskmaster and a tricky business. Many airlines, including in India have accumulated huge amounts of aviation losses. Besides some of the government policies that too contributed to this – high taxes on jet fuel, restriction on flying abroad, etc are still prevalent as a road block to the smooth flying of the industry. And Tata has entered aviation at this troubled time; but the Tatas’ venture with AirAsia gives cause for optimism and confidence to themselves and others in the field. But are Tatas’ doing the right thing at the wrong time and succeed? Only time will tell.

In 1932, JRD Tata started Tata Airlines to deliver first government mail. This hugely successful airline was among the first businesses taken over by the government of independent India. Air India, a government enterprise and Maharaja was a symbol of fast developing India. Over the past two decades the Indian skies have been opened to private airlines. Many have come and gone, some have stuck on bravely. JRD’s successor Ratan Tata remained aloof as government regulations and taxes made flying an un-lucrative proposition. Presently only a few airlines are still flying, with the fate of liquor baron Vijay Mallaya’s Kingfisher Airlines which promised a rich flying experience is well known to all. Now eager to draw foreign investment into the already beleaguered industry, the government has not allowed red tape or other technicalities to come in the way of a clearance for AirAsia, a Malayasian low-cost carrier to set up an airline with the Tata group. The FDI policy announced last September allows foreign airlines to buy stakes in local ones; and the Foreign investment Promotion Board decided on the first proposal in aviation since the latest rules were applicable.

 

Tatas’ stake in the proposed airline is 30% and AirAsia’s presence in the country is restricted to coastal airports to carry budget-conscious Indians to holiday destinations in south-east Asia. The new carrier’s India plans are yet to emerge clear, but the emphasis would be on low cost travel. Bon voyage AirAsia in India!

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