Foreign airlines may own stakes in Indian carriers

New Delhi: The government is considering a proposal to allow foreign airlines such as Singapore Airlines, British Airways and Lufthansa to pick up equity stakes in domestic carriers, but with riders.
It is preparing the ground for a major policy shift on foreign ownership in aviation. Government sources say foreign airlines may be allowed to own a 20-25% stake in local carriers, but their role on boards and in the management would be limited.
The civil aviation ministry had, in the past, argued that allowing larger foreign airlines to own stakes in fledgling Indian carriers could cause harm to the domestic aviation sector.
“Things have changed. Earlier, only one Indian airline operated internationally. But now, three domestic carriers fly to foreign destinations. Our carriers have grown in size and scale in three to four years’ time. We don’t think the earlier concerns are relevant. If foreign telecom companies can buy stakes in Indian telecom companies, why can’t foreign airlines pick up stakes in domestic airlines?” a government official asked, on the condition of anonymity.
Civil aviation minister Praful Patel told ET that a proposal to allow foreign ownership of Indian operators is under discussion, as the government looks at measures to revitalise the sector.
“Allowing foreign airlines to hold stakes in domestic airlines has always been an option. There is no firm decision yet, though. Internationally, in most cases, foreign direct investment by entities other than airlines is allowed only (to the extent of) 49%. In case of foreign airlines, FDI is not allowed (to be) more than 25%,” he said.
01/01/09 Nirbhay Kumar/Economic Times

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