A significant chunk of the country's air traffic market is all set to be seized by the proposed Singapore Airlines-Tata joint venture—if the airlines is finally allowed entry into Indian skies.
The TATA-Singapapore Airlines joint venture still awaits clearence
A significant chunk of the country's air traffic market is all set to be seized by the proposed Singapore Airlines-Tata joint venture—if the airlines is finally allowed entry into Indian skies.
Tatas is all set to revive the Rs 2,200-crore project, say well-placed sources in the group. Top Tata officials are already trying to work out the details with the civil aviation ministry. The Tata-Singapore Airlines application was first submitted in 1994. But according to one Bombay House executive, they were 'pretty optimistic' of the project seeing the light of day now—two years down the line—with the change in government.
However, the possible emergence of the new airlines is causing a lot of concern in rival airline companies throughout the country. The reason is obvious: the combined might of the Tatas and Singapore International Airlines (SIA), one of the biggest and most efficient airlines in the world, may make life very difficult for other private operators and even Indian Airlines. Therefore, what the partners are likely to impress upon the new government is that instead of being tough competition to Indian Airlines, the proposed airline would be actually complementing Indian Airlines' fleet, in view of the growing number of air travellers.
How this line of reasoning is viewed remains to be seen. Particularly as the venture is also being opposed by domestic operators who point out that the SIA now owns 70 per cent of the Indian ethnic traffic between India and Singapore, the rest being shared by Air India and Indian Airlines.
The airline project envisages the import of six to seven 130-seater aircraft to begin with and then an increase in the fleet strength to 22, which would make it larger than any other fleet except Indian Airlines. SIA has already floated global tenders for buying the aircraft. And the fact that the Tatas are involved in building an international airport at Bangalore in association with a consortium of companies from Singapore lends credence to the rumour that the new airline will be headquartered in Bangalore.
More indication of the Tata-SIA resolve was available at a press conference recently in Delhi where the newly-appointed general manager of SIA, S. Jainul Alijunied, said he was 'optimistic' about their application, but was "willing to wait". SIA also made a public declaration of its intent by announcing its annual results for the first time in India.
SIA has agreed to reduce its equity stake in the joint venture from 50 to 40 per cent, but its top executives say they do not expect it to go down further. Aviation industry analysts say that this lowering of equity may well be the first step towards beginning of Indian operations. SIA had until recently shown interest in a 50-per cent equity participation, but that was cited by the Narasimha Rao administration as a reason to block the application. According to Alijunied, the current holding of the airline "seems substantial" and "reasonable".
SIA says it has plans to boost both cargo and passenger traffic. But the general perception is that passenger traffic between India and Singapore can only be improved with the help of bilaterals, that is, agreements between the airlines of the two countries establishing an exchange rate of seats on each other's flights. As of now, they do not seem to have planned any more bilaterals.
Meanwhile, despite an 11.7 per cent rise in Singapore Airlines' net profit in 1995-96, from $917 million to $1.025 billion, analysts express disappointment at the company's core business performance. One market analyst has predicted SIA's overall yield in cargo and passenger traffic to decline by around two per cent in 1996-1997. Which makes the Indian skyline an increasingly lucrative target for the SIA venture.