Differences seem to have emerged within the civil aviation ministry on how to deal with the proposed AirAsia-Tata joint venture (JV).
On the one hand, minister Ajit Singh says his ministry is open to giving the proposed airline firm a national air operator's permit to fly across the country; on the other, senior ministry officials say they would prefer the company be given a regional permit before being allowed to fly national later.
Singh told Business Standard: "The AirAsia-Tata alliance has not yet applied, but we have no problem in giving it all-India permit. As for demand-supply mismatch on trunk routes and growth in traffic, why should we worry? The airlines should be worried. The market forces will take care of that. Competition always benefits consumers."
A senior ministry official, however, said: "We have concerns over the firm being issued a national permit in the beginning. The ministry is about to bring new route dispersal guidelines for regional connectivity. If all start deploying planes on metro routes, there would be a demand-capacity mismatch."
The bureaucracy, of course, has the option of taking up the divergence in its views with the minister's with the cabinet secretary.
A regional permit allows an airline to operate in specified designated zones of the country. The holder of a regional permit can fly out of four regions - north, south, west and east, including northeast - and operate flights from a metro city in the chosen region to smaller cities within and outside the chosen region. A regional airline is not allowed to fly to a metro city outside its own region.
AirAsia promoter Tony Fernandes had said in a public statement his airline JV would start operations with three-four A-320 aircraft, initially concentrating on Tier-II and -III cities, instead of flying to Delhi and Mumbai, where airport charges were too high.
Another senior ministry official raised some questions: "AirAsia plans to start with a three-four plane fleet. However, according to rules, a fleet of at least five aircraft is required. Besides, is it viable to fly 180-seater A-320s in Tier-III cities? Had they discussed these things with the civil aviation ministry, Fernandes would have had more clarity."
The government had earlier raised questions on G R Gopinath's application for upgrade of his airline's permit from regional to national, saying he should first perform well on the regional routes and then seek an upgrade.