The Tata Group has finally thrown in the towel and abandoned plans to launch a privately owned domestic Indian airline in the face of more than three and half years of government procrastination, as well as repeated changes to its aviation policy.

Tata dropped plans to launch the new carrier after India's Foreign Investment Promotion Board (FIPB) once again deferred any decision on a revised proposal, against a background of political and industry opposition.

The decision brings to a close a long running battle with the government, which began in early 1995 with a Tata proposal to launch a new carrier, with Singapore Airlines as a 40% shareholder. A subsequent change in New Delhi's aviation policy barred foreign carriers from taking an equity stake in domestic Indian carriers.

The revised application, which was submitted in late 1997, restricted the Singapore carrier's involvement to that of technical support, with the 40% shareholding (worth about $80 million) to be owned by non-aviation Singapore and US interests, with candidates including the American Insurance Group and Government of Singapore Investment Corporation.

This was then overruled by a further amendment to the country's aviation policy, barring the involvement of any foreign airlines or the lease of their aircraft.

Despite Tata's assertions that its latest proposal complied with the new policy, the FIPB again failed to endorse the proposal in response to strong lobbying within the civil aviation ministry by state-owned Indian Airlines and private operator Jet Airways.

Tata Airlines was planning to operate seven 140-seat aircraft by the end of the first year of operation, with the fleet growing to 18 aircraft after five years.

Meanwhile, Tata Industries has also announced that it intends to back out from the $350 million Bangalore International Airport project, in line with the decision of its consortium partners, Raytheon and Changi Airport, to abandon the plan following the delay in official clearance.

Source: Flight International