New Delhi: Even if the government allows foreign direct investment (FDI) in aviation, there’s unlikely to be a deluge.
‘’The whole thing has been blown out of proportion. Not more than three to five foreign airlines will be keen on picking up stakes in Indian carriers,’’ says a Mumbai-based investment banker, who has worked on multiple airline deals in India.
The government is planning to allow foreign carriers to own up to 49 per cent equity in Indian carriers. A decision was deferred today to next week, for more discussion.
Foreign airlines which could be interested in taking stakes in Indian carriers are Etihad, Qatar Airways, British Airways (BA) and Singapore Airlines (SIA). This is based on their investment record and known intention to invest in the Indian market.
Etihad has taken 29 per cent stake in Europe’s third-largest budget carrier, Air Berlin. Qatar Airways has bought 35 per cent in a Luxembourg-based cargo airline, Cargolux International. Both Qatar and Etihad like to take minority stake in airlines where a good management is in place. They both have huge capacity induction plans and don’t want to spare management resources to run another airline.
Among European carriers, BA would be the most keen to buy into an Indian carrier, given its interest in India and the growth in West-bound traffic from here. With Kingfisher Airlines’ entry into the Oneworld Alliance uncertain, BA would like to protect its turf by entering into a strategic alliance with another Indian carrier.
15/04/12 Ranju Sarkar/Business Standard
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