Foreign airlines say no to Indian carriers, for now

Mumbai: International airlines are not willing to buy stakes in Indian carriers at this point, even as the ministry of civil aviation is considering a proposal to permit foreign carriers to invest in local airlines.
While the ministry is considering a proposal to allow up to 49% investment by foreign carriers in Indian aviation firms, it may eventually limit this to 26%. Current foreign investment rules allow foreign companies to take up to a 49% stake in Indian airlines, but specifically prohibit a foreign airline from doing so. Several Indian airlines have been asking the government to relax the rule.
A sharp fall in passenger demand and high jet fuel prices are estimated to lead to a combined loss of $2 billion (Rs9,460 crore) for Indian carriers in 2008-09, and all of them are desperately looking at raising capital to stay afloat.
Mint spoke to at least two dozen global carriers on the sidelines of the 65th annual general meeting of the International Air Transport Association (Iata) in Kuala Lumpur earlier this week, and none of them were willing to invest in Indian carriers as they are busy in putting their own houses in order.
Iata has doubled its estimate of losses that global airlines are expected to post in 2009 to $9 billion.
Richard Branson’s Virgin Atlantic Airways Ltd, which was interested in the Indian market till recently, isn’t enthused by the Indian government’s plans. Its chief executive Steve Ridgway said his airline was once looking at investing in Indian carriers, but not any more. “We are not looking at investing at this point of time. This is the worst time to do that. Forget about making profits, we are looking at how to conserve cash.”
According to rival carrier American Airlines Inc.’s senior vice-president (planning) Henry C. Joyner, this is the most difficult environment in terms of operating capital. “It’s better to stay away from investing now.”
11/06/09 P.R. Sanjai/Livemint

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