Will govt tweak FDI norm for AI-IA revival?

New Delhi: The government may have to re-examine the rule of disallowing foreign airlines to invest in desi ones while finalising on the survival strategy of cash-strapped Air India. According to highly placed sources, a complete paper on the merged AI-Indian Airlines' entity will be sent to the Cabinet shortly. Given its dire financial condition, sources said, the options are rather limited.
"AI has been asked to cut all loss-making routes which means all foreign flights to places like New York, London and Frankfurt will have to be removed. So the government has to decide if it wants the Indian carrier to fly across the world or have mainly a domestic presence with some flights to nearby places like Gulf and southeast Asia," said the source.
Since keeping the merged entity, National Aviation Company of India Ltd (Nacil), alive in its present form means infusing almost Rs 5,000 crore annually, the government may look at funds from outside. "If a strategic investor has to be brought in, then the current rule of not allowing foreign airlines to invest in desi ones may have to be relooked at," said sources.
Realising that Nacil needs some professional handling if it's to be saved, the government has begun taking help from industry experts. The airline's chief operating officer is to be selected on Saturday from five shortlisted names, including some expats.
25/03/10 OptoIQ

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Categories: Foreign Mar 2010, NACIL Mar 2010