Friday, March 17, 2017

Air India opposes changes to ownership norms

State-owned Air India has opposed changes to guidelines of ownership and control that will make it easier for a foreign entity to fully own an airline in India. Private airlines have already opposed the proposed changes.

Two Air India executives that Business Standard spoke to confirmed the airline had conveyed its opposition to the proposed changes to the civil aviation and commerce ministries. The development could dampen the government’s zeal to relax norms in order to attract foreign direct investment.

Qatar Airways Chief Executive Officer Akbar Al Baker last week announced it would start an airline in India, the world’s fastest-growing aviation market, together with Qatar’s sovereign fund.

Existing norms mandate that two-thirds of members of an airline’s board must comprise Indian nationals, which the draft proposal intends to change.

Air India Commercial Director Pankaj Srivastava in a meeting with Commerce Minister Nirmala Sitharaman said the changes would hamper the business prospects of the airline.

“The airline’s version was that in case of entry of a deep-pocket foreign airline, the impact would be harsher on Air India, which had steadily lost ground to private Indian carriers,” said a source who was privy to the discussions.

When contacted, Srivastava declined to comment on the issue. Air India Chairman Ashwani Lohani also refused to comment.

“The impact of allowing a foreign airline in India will be similar for Air India and other private carriers. We will also face the same deep-pocket competitor backed by its government. Air India is still under a huge debt burden,” an Air India executive said.
17/03/17 Arindam Majumder/Business Standard