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India to benefit from more competition

NEW DELHI: February 24, 2016. Tata Sons, which operates Vistara in a joint venture with Singapore Airlines, says the removal of the Indian government’s 5/20 rule - which requires an airline to operate 20 aircraft on domestic routes for five years before beginning international services - would boost international traffic to and from India to over 100 million passengers by 2021, compared to 43 million in 2014.

Air Asia IndiaNoting the rule has allowed foreign airlines to capture 70 percent of India’s international traffic, Tata said the rule also discriminates against Indian airlines “as foreign airlines that do not meet these criteria are allowed to operate in Indian skies, but Indian airlines cannot enjoy reciprocal rights”.

With forward-looking policies and steps to reduce the costs of doing business, Tata said the airline industry in India is likely to see greater activity and more competition in the future.

“The claim that air fares in India will go up as a result of removing the 5/20 rule is specious and unfounded. Not protectionism, but increased competition within the country will further contribute to lower prices and greater accessibility of air travel to common people,” said the company.

Responding to competitors saying the Tata joint- ventures with Singapore airlines and Air Asia are not managed by Indian nationals, it said both majority ownership and effective control of both airlines are fully compliant with the requirements of Indian regulation.

“Further, all the important decisions concerning the day-to-day operations of the airlines are taken by the management teams of these airlines under the overall supervision, control and direction of the respective boards of directors which include a majority of Indian nationals.

“These boards are chaired by long-time Tata veterans, S Ramadorai (Air Asia India) and Bhaskar Bhat (Vistara),” the company pointed out.

The Tata group pioneered civil aviation in India with the establishment of Tata Airlines in 1932 and built the carrier into Air India before it was nationalized.

Earlier Ratan Tata, chairman emeritus of Tata Sons, reportedly had criticized Indian airlines lobbying to keep the 5/20 rule saying it “smacked of protectionism and had no place in an open economy”.

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