19 September, 2020

Mid-Flight Crises

An IA memo deems the Tatas' entry dangerous for its health

Mid-Flight Crises
outlookindia.com
-0001-11-30T00:00:00+05:53

THE Tatas, with their proposed Rs 1,475-crore market base, have been threatening to alter the rules of domestic aviation for some time now. And as the pro- and anti-Tata players go into hectic lobbying mode with the crucial Foreign Investment Promotion Board (FIPB) meeting coming up, an internal memo prepared by top Indian Airlines (IA) brass predicts that the Tatas' entry into the aviation sector "would result in rendering the domestic carrier (IA) sick and we would have a replay of the 1950 scenario when the industry had to be nationalised". "Competition is good for Indian Airlines and all other domestic airlines," says the memo. "What's not desirable is the excess capacity."

According to the memo, the average passenger traffic during the last two years has declined by about 5 per cent compared to earlier projections. The Indian domestic air traffic has declined by approximately 1.4 per cent in 1996-97 and 2.6 per cent in 1997-98. Experts predict that because of the depressed state of the Indian economy,...

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