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Business News/ Companies / News/  Rao govt invited J.R.D. Tata to start airline, but backed out: Ratan Tata
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Rao govt invited J.R.D. Tata to start airline, but backed out: Ratan Tata

J.R.D Tata was told that the Narasimha Rao govt planned to allow private airlines, but it never happened, says Ratan Tata

This isn’t the first time that Ratan Tata has made a revelation about the group’s thwarted plans to enter aviation prior to its takeoff this year with Vistara. Photo: MintPremium
This isn’t the first time that Ratan Tata has made a revelation about the group’s thwarted plans to enter aviation prior to its takeoff this year with Vistara. Photo: Mint

New Delhi: Tata Sons Ltd’s chairman emeritus Ratan Tata has disclosed that the Congress government of then prime minister P.V. Narasimha Rao invited the group in the 1990s to start an airline and then backed out of its commitment—his latest revelation related to the conglomerate’s abiding interest in aviation.

Group patriarch J.R.D. Tata had gone to meet the cabinet secretary and was informed that the Rao government planned to allow private airlines, Tata recalled at a function in Mumbai on Wednesday evening.

“J.R.D. Tata first came away quite excited but told me, he said we have been out of airline industry for many years and the industry has changed; it’s become very much competitive. It’s got new technology and the industry is different from what it was when Air India was first started, so let’s go and get the best partner we can... and give the country a world-class airline," Tata said. “That never happened."

“The same government that asked us to start an airline... made sure that this airline would never happen," Tata said to an audience largely made up of travel industry executives who had gathered to celebrate the launch this month of Vistara, Tata Sons’ joint venture with Singapore Airlines Ltd (SIA). Some media representatives were also in attendance.

Tata, 77, who stepped down in 2012 as chairman of the conglomerate with interests ranging from salt to steel and tea to telecom, didn’t specify the year in which this episode took place. Rao’s government was at the helm of India from 1991 to 1996.

J.R.D. Tata, who is known as the father of Indian aviation and founded Tata Airlines in 1932 that was later renamed Air India and eventually nationalized, died in November 1993.

Prime Minister Rao, who died in December 2004, is credited with opening up the Indian economy, dismantling the so-called licence-permit-quota Raj that had stifled private enterprise since independence.

Under his administration, a few private airlines like Naresh Goyal’s Jet Airways (India) Ltd and Damania Airways were licensed to compete with Indian Airlines, provoking strikes by unionized workers at the state-run carrier and public outrage over the consequent flight disruptions.

This isn’t the first time that Tata has made a revelation about the group’s thwarted plans to enter aviation prior to its takeoff this year with Vistara.

In 2010, he hinted that he had to abandon plans to launch an airline because he refused to pay bribes to authorities to secure the necessary approvals.

“I happened to be on a flight once; a fellow industrialist sitting on the seat next to me said, ‘You know, I don’t understand, you people are very stupid. You know the minister wants 15 crore. Why don’t you just pay, you want the airlines.’ I said, you will never understand this; I just want to go to bed at night knowing I haven’t got the airline by paying for it," Ratan Tata said in a speech.

In 2000, Tata Sons and SIA abandoned a joint attempt to buy a 40% stake in Air India. Political resistance and corporate rivalries were blamed for the Tata group abandoning the project. An earlier attempt by the two companies to start an Indian airline with 40% equity contribution by SIA was also aborted.

Tata Sons and SIA succeeded in their third attempt. The maiden flight of their full-service joint venture, branded Vistara, was on 9 January, the previous Congress-led government having in 2012 reversed a previous policy that didn’t allow foreign investment in local airlines.

Vistara now has flights to Delhi, Mumbai, Goa and Hyderabad, taking on Jet Airways and Air India, besides competing with no-frills airlines like IndiGo, SpiceJet Ltd and GoAir.

“What we need to do is to ensure we differentiate from the other airlines from the quality of our service, the safety we provide and the experience that we give our passengers. if we lose that we would have lost a lot; if we cherish we will continue to be the airline of choice," Tata said.

He warned that rivals will continue to create issues.

“As we go into this new world, competition is going to cause us to have tremendous challenges. Both partners, I think, have a reputation in meeting challenges head on and resolving the issues head on. The patience that SIA has displayed over this period itself indicates that they are willing to face challenges, whatever time it takes, whatever it takes out of you," he said.

The Vistara launch has also not been without its share of controversy. Existing airlines like Jet Airways, IndiGo, SpiceJet and GoAir have moved courts against the government and Vistara, saying only existing airlines were to be allowed foreign airline investment under the 2012 policy change.

Jitender Bhargava, a former Air India executive director, who attended Tata’s speech at Taj Lands End hotel in Mumbai, said Tata was very clear in his views. “It does not speak well of our system where an airline takes 16 months to launch its flight.... But this time the airline has at least seen the light of the day unlike in the past when entry of Tata into airline business had been thwarted by either the government of the day or by the promoter of a private airline who could use his clout to influence government decisions," Bhargava said.

Tata Sons holds a majority stake of 51% in Vistara and SIA the remaining 49%.

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Published: 29 Jan 2015, 05:54 PM IST
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