Wednesday, June 22, 2016

Civil Aviation Policy a big step forward, says Tony Fernandes

In a move that signalled the government’s strong reform drive, the FDI floodgates have been thrown open in nine sectors, including aviation. The government has given the nod to foreign non-airline entities to invest up to 100 per cent in domestic airlines. These measures, coupled with the Civil Aviation Policy last week, are bound to ward off at least some turbulence in aviation sector. Bloomberg TV India discusses the efficacy of the measure with Tony Fernandes, Group CEO, AirAsia.
Let’s start with your view on the overall policy intent of the government, with regard to the opening up of FDI channels. Companies cannot invest beyond 45 per cent, but funds will be in a position to invest beyond 49 per cent.

I think this is a great step for the Indian aviation sector and for the government. The fact that they removed the 5/20 rule and replaced it by 0/20, is a compromise. We would love to see it removed completely. But I think it was a surprise, a very positive step to see that foreigners could now own 100 per cent of an airline. It is a good step and it shows the intent of the government to bring in more capital into this industry which is a great driver of the economy.

In terms of brown field expansions, that is quite a booster for airport developers in India…

It is a superb and very progressive move. Probably, the most progressive in Asia to allow foreign and private companies to build new airports with 100 per cent FDI. I really applaud that. I urge other countries in Asia to look at what the Indian government is doing.


Certain quarters of the industries have expressed a grouse to the effect that the government could have been more aggressive in the Civil Aviation Policy. You spoke about doing away with the 5/20 norm. The weightage on ‘5’ has gone. But in terms of ‘20’, aircraft rules still remain. How big a deterrent do you think it is for the new entrants in the space of civil aviation, which is a capital-heavy, long gestation-period space?

It is not perfect. India is a complicated country. The fact that they have actually done it, which is more than any other government has done previously, is indeed a step forward. And we continue to lobby, we continue to change and we continue to seek better policies. But I applaud that they have done something. At least, for the first time, we have clarity and we know what we need to do. That is not easy because there are so many vested interests. Local airlines have been lobbying against the 5/20, they talk about confusing credit systems and all this. But India is a fantastic market.
22/06/16 Pranoy Nath Banerji/Bloomberg/Business Line
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