Foreign airlines may buy into desi ones

New Delhi: Cash-starved Indian carriers may soon get some fund infusion and management expertise from leading international airlines. On Friday, a meeting of committee of secretaries, headed by the cabinet secretary, will take up aviation ministry's proposal to allow foreign airlines to acquire 25% stake in domestic airlines, with limited management control and no representation on board.
The aviation ministry's proposal has backing from the commerce ministry, with department of industrial policy and promotion is pushing for a 49% stake to be offered to the foreign airlines in desi ones. The aviation ministry was opposed to the idea of FDI from foreign airlines. However, it changed mind to help domestic airlines survive the present downturn.
"In Friday's meet, the aviation ministry will push for a 25% cap and its views will get due importance since the matter concerns the airline sector. Some consensus on quantum of stake may emerge as the cabinet note has to be moved by the commerce ministry for final approval by the government," said sources.
A number of foreign airlines like Lufthansa, British Airways and Singapore Airlines are sitting on huge cash reserves and have in the past expressed interest in buying stakes in domestic airlines. At present, foreign players except airlines can hold up to 49% stake in Indian carriers. Allowing foreign airlines can see crucial fund infusion in the aviation sector.
Aviation sources said that FDI will also enable some players who started airlines but have now found they are not able to run them properly to make a face-saving exit.
21/01/09 Saurabh Sinha/Times of India

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Categories: Foreign Jan 2009, Indian Aviation- In General Jan 2009