Investors head for airports, fly over airlines

Mumbai: Airlines appear to be losing sheen as an investment destination. Investors now find airports more attractive to invest in, followed by cargo and logistics and maintenance, repairs & overhaul (MROs). The India story is, however, flying high with the country considered the most attractive emerging nation to invest in the aviation sector, along with China, but considerably ahead of the Middle East, Brazil and east European markets.
The Centre of Asia Pacific Aviation carried out a survey among national and international investors that showed investments in airlines only preceded those in duty-free retail, business jets and in-flight catering. Airports seem to have caught the fancy of investors with over 86% viewing investment opportunities. A similar proportion (82%) is favouring greenfield metro sites such as Navi Mumbai as of ‘greatest interest’.
Interestingly, investors who want to invest in the Indian airline business prefer low-cost carriers (LCC) despite their losses. Only 40% of them said they may invest in full-service carriers, while an overwhelming 80% showed interest in LCCs.
In fact, international LCCs, which would be a reality soon as Indian LCC’s get approval to start international services, could be the next big investment opportunity for investors, points out the survey.
On the current foreign direct investment(FDI) guidelines in the aviation industry, over 70% of the respondents believed that the cap on foreign airlines shareholding in Indian carriers should be 49% or more.
13/06/07 Sudipto Dey/Economic Times

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Categories: Airports Jun 2007, Foreign Jun 2007, New Jun 2007