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Ibrahim's aviation policy has several discrepancies

And what of ModiLuft? Ever since it broke away from Lufthansa, ModiLuft's S.K. Modi is said to have been scouting around for a new partner. Moreover, he has been given permission by the FIPB to float a US$ 60 million Global Depository Receipt issue. This effort towards restructuring could now be in jeopardy.

Ibrahim's aviation policy has other discrepancies. While it disallows the participation of foreign airlines, it allows foreigners to hold equity in India's domestic airlines -- creating a glaring loophole that could encourage backdoor entries.

The new policy has also sought to overturn several strictures of Ghulam Nabi Azad's 1994 aviation policy. It was Azad's contention that the entry of new airlines be strictly regulated since there wasn't enough airport and maintenance infrastructure available. But that certainly didn't deter Jet Airways from expanding its fleet from six to 18 ever since it set up operations in 1994.

Azad placed several other strictures which virtually spelt the death-knell for private airlines. Officially, for instance, private airlines were not even allowed to call themselves airlines, but had to be content with the term, 'air taxi operators'. Now were they allowed to publish schedules.

Now, on paper at least, operators have not only the freedom to enter the market but also the autonomy to decide the type, size and make of the aircraft. All they require is an airworthiness certificate from the Director-General of Civil Aviation.

That, however, is easier said than done. To start with, the compulsory equity base for small airlines has been increased from Rs 30 million to Rs 50 million. (For airlines operating aircraft that have over 50 seats, it has been increased from Rs 50 million to Rs100 million).

Moreover, the minimum fleet size has been raised from three aircraft to five. This means that Sahara India Airlines -- the only other airline apart from Jet and NEPC to run scheduled flights -- will have to expand if it doesn't want to be relegated to the status of an air taxi operator.

Civil aviation sources are sceptical about the ability of Indian business to raise not just the funds but also the technical knowhow required to operate a world class airline. "You have to know what you want -- money or knowhow," said a source with a private airline, asking not to be named.

As of now, existing private airline operators are chary of commenting on Ibrahim's policy. Most said it was too soon to react.

However, Russi Mody, until recently chairman of Indian Airlines and Air-India, has taken exception to Ibrahim's statement against Tata-SIA on one ground: he believes Indian Airlines can hold its own in the face of any competition.

That, of course, is still to be tested. And if the current minister has his way, that day may never come.

Courtesy: Sunday magazine

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