Aviation FDI: Expecting to take off

The civil aviation ministry has revived a proposal to allow foreign carriers to invest in domestic airlines by putting it on its new list of reforms. The proposal is viewed by the ministry, as one way to improve the bottomlines of cash-strapped domestic airlines.
Last year, when the country’s second-largest low-cost airline SpiceJet was starving for cash, foreign investor Wilbur Ross had come to its rescue. Most other Indian airlines are now caught in the same situation. The three major carriers — Air India, Jet Airways and Kingfisher — are estimated to have combined cumulative losses of Rs 8,000 crore in 2008-09.
Currently, non-aviation companies can buy up to 49% stake in a local airline. But a foreign airline cannot invest at all. While Kingfisher and Jet Airways are trying to raise funds through various routes, state-owned Air India is seeking around Rs 4,000 crore through soft loan and fresh equity infusion from the government. Liquor baron and promoter of Kingfisher Airlines Vijay Mallya has advocated foreign direct investment (FDI) by global airlines into domestic airlines.
Aviation consultancy Centre for Asia-Pacific Aviation (CAPA) head Kapil Kaul believes it will improve investors’ confidence in the industry.
25/05/09 Nirbhay Kumar/Economic Times

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