DIPP raises alarm over desi airlines’ survival

New Delhi:The department of industrial policy and promotion (DIPP) has said that unless foreign airlines are allowed to invest in desi ones, many cash-strapped domestic carriers may shut down. This serious push comes despite reservation against the proposal from airlines like Jet and IndiGo.
The note prepared by DIPP for the cabinet committee of economic affairs (CCEA), which proposed allowing up to 26% foreign carriers' stake in domestic airlines, said that "private airlines are in dire need of funds for their operation and service upgradation to compete with global carriers. Denial of access to foreign capital could result in collapse of many of our domestic airlines, creating a systemic risk for the financial institutions".
DIPP said that from January 2000 to August 2011, total FDI inflow into the air transport sector was $422.7 million - a 'negligible' 0.29% of the total FDI inflow into the country. "The reason for such a low level of investment in the sector is the lack of interest by private equity fund in a risky business like airlines. The prospective investors can be only from civil aviation industry itself," the note said.
26/11/11 Saurabh Sinha/Times of India

To Read the News in full at Source, Click the Headline

Categories: Foreign Nov 2011, Indian Aviation- In General Nov 2011