DGCA clears Tata-SIA Airlines ahead of court hearing

The Directorate General of Civil Aviation (DGCA) has rejected all the objections against the proposed Tata-SIA Airlines Ltd, clearing the way for granting the joint venture an airline licence ahead of the matter coming up for hearing in the Delhi high court on Friday.

With the regulator rejecting all the objections against the proposed airline, the way is clear for granting an airline licence to Tata-SIA Airlines in the next few weeks.

DGCA had called for public comments on Tata-SIA's application for an airline licence and it had received a total of six representations – four against and two in support of granting licence to the new airline.

''After the detailed examination of objections / issues raised in the representations, the response of M/s TATA SIA Airlines Ltd, and various rules and other provisions for issuance of air operator permit, I am of the view that the representationists have not been able to make out any case against M/s. TATA SIA Airlines Ltd, for refusing to consider its application for grant of AOP (Scheduled),'' DGCA director general Prabhat Kumar said in an order on Wednesday evening.

''I, therefore, do not find any reason for not considering the application of M/s. TATA SIA Airlines Ltd, for grant of AOP (Scheduled). In view of the above, the objections raised by the representationists are not sustainable. It is, therefore, decided to consider the application of M/s. TATA SIA Airlines Ltd, for issuance of AOP (Scheduled) subject to the compliance of various requirements in terms of rules,'' he added.

Local airlines, including IndiGo and Jet Airways (India) Ltd, were among those who opposed the launch of Tata-SIA. State-run Air India Ltd did not oppose the entry.

Besides the objections filed by the airlines with the regulator a lawsuit filed by Bharatiya Janata Party member Subramanian Swamy against the grant of licence to Tata-SIA Airline will also come up for hearing in the Delhi high court on Friday.

The civil aviation ministry, which has been made a party in the case, is likely to go along with the regulator - that it has followed all rules and regulations in granting clearances to the proposed airline.

Swami, however, is expected to take up the issue with civil aviation minister Ashok Gajapathi Raju, who had promised to hear his arguments against the new airline.

Swamy and some of the local airlines argue that the aviation ministry's September 2012 decision was to allow foreign airlines to invest in existing Indian airlines and that the government agencies had wrongly interpreted the decision to allow a foreign airline to start a new venture in India.

DGCA, however, holds that all its decisions are subject to law. As far as its rules are concerned, the regulator pointed out that the airline needs to be registered and its principal place of business should be in India; the chairman and at least two-thirds of its directors should be citizens of India; and the airline's substantial ownership and effective control should be vested in Indian nationals. Tata-SIA meets all these conditions.

Also, it was argued by one Jain that 18.5 per cent shareholding with foreign nationals in Tata makes effective equity contribution by Tata in Tata-SIA Airlines less than 51 per cent. However, Tata-SIA has clarified that Jain is ''factually incorrect and 18.47 per cent of the paid-up capital of Tata is held by two Indian entities and only 0.03 per cent is held by foreign nationals.

It may be noted that for the Indian government and its agency used to record delays in clearing proposals, the Tata-SIA venture and the earlier AisAsia India proposals have been exceptions to the rule.

On 24 November, SIA said it had received formal clearance to invest in the Indian airline from India's Foreign Investment Promotion Board. The airline then approached the home ministry for its approval on 13 January and the no-objection certificate was granted on 2 April.

Tata group holding company Tata Sons Ltd and Singapore Airlines propose to start a full-service airline with $100 million in initial investment, with the Indian partner holding 51 per cent and Singapore Airline the remainder.

Tata group is already into a joint venture with Malaysian carrier AirAsia Bhd in a budget airline AirAsia India, which was launched last month.