Airlines look for more space in air, on ground

Mumbai: As the ruling United Progressive Alliance (UPA) is all set to form the new government, the aviation industry is expecting many key policies to go through. Among them are allowing foreign airlines to pick up a minority stake in domestic airlines, having a new ground handling policy and the development of non-metro airports.
The UPA had given a six-month extension for ground handling which ends on June 30 while the proposal for allowing foreign airlines into the domestic sector, which was moved by the civil aviation ministry, was not cleared by the UPA the last time.
Paramount managing director M Thiagarajan told ET, “The new government will be more stable and can take decisions more firmly without any interference. We expect the government to certainly take care of the domestic aviation sector and sort out key issues and pending policies in the aviation sector.”
The industry has been plagued by large losses, rising debt levels and a serious liquidity crunch. According to an analyst at a domestic brokerage, measures like increasing the present cap on Foreign Direct Investment (FDI) in the aviation sector as well as withdrawing the restrictions on investment by foreign airlines in the domestic carriers are important to save the industry from the current crisis that it finds itself in.
Currently, foreign airlines are not allowed to pick up equity in aviation companies while foreign investors and financial institutions can hold up to a 49% stake. “Consolidation in the sector is inevitable and allowing foreign airlines to buy equity will certainly help domestic airlines who are reeling under huge debt,” said Ashwini Kakkar, executive vice-chairman of Mercury Travels.
Meanwhile, if the ground handling policy goes through in the current form, its is expected that there will be a large number of people who will lose their jobs from July.
18/05/09 Mithun Roy/Economic Times

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Categories: Airports May 2009, Indian Aviation- In General May 2009