Global airlines wary of investing in India

New Delhi: Just because foreign airlines may soon be allowed to invest in India's battered carriers doesn't mean they will.
New Delhi's expected move to allow global airlines to own up to 49 percent in Indian carriers has been welcomed by investors as a potential lifeline for an industry mired in $20 billion of debt and on course to rack up $3 billion in annual losses.
But aviation industry experts say any celebration is premature.
"There's absolutely no reason to be bullish on airlines," said a Mumbai-based analyst with a local brokerage, who did not wish to be identified.
"Unless fuel and other dollar-denominated costs come down, nobody's going to invest in these companies, they're in such bad shape," he said, referring to a 16 percent decline in the rupee in 2011, which has driven up costs for local carriers.
Five of the country's six main operators are loss-making. Taxes in India make jet fuel far more expensive than for global competitors. State-owned Air India, which is trying to restructure $4 billion in debt, has slashed fares, forcing competitors to follow suit.
Two carriers, IndiGo and Go Air, have between them ordered about 200 planes for more than $23 billion, adding capacity to a market where dozens of planes already sit grounded.
05/02/12 Reuters/Economic Times

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Categories: Foreign Feb 2012, Indian Aviation- In General Feb 2012