India has the third-largest domestic aviation market in the world and is now considering making it easier for foreign airlines to invest in Indian airlines.
According to an unnamed source in Prime Minister Narendra Modi’s government, tourism website Skift which is Nordic for “shift” or “transformation” is reporting that India is considering amending a foreign ownership rule when it comes to domestic airlines.
When you look at airline ownership rules in India it is a little misleading as the country allows 100% ownership in India-based airlines providing they have government approval.
The truth, however, is that foreign investment in Indian airlines is limited to a 49% stake like Singapore Airlines stake in Tata-owned Vistara.
The reason why the Indian government wants to relax its rule on foreign airline ownership is that it cannot find a private buyer for state-owned Air India.
Debt-laden and overstaffed with around 12,000 employees who enjoy incredible benefits like medical insurance for their entire families for life, if Air India was a horse it would have been shot already.
On a domestic level as a full-service airline, it cannot compete with the private sector and the airfares offered by the likes of Spicejet and IndiGo.
Internationally it has to compete with Gulf carriers Emirates, Qatar, and Etihad who quite honestly provide a better service with more connections to the India subcontinent than Air India could ever manage.
The only thing Air India has that could be enticing to a foreign buyer is coveted landing slots at some of the world’s major airports.
Seriously though, if the Indian government wants to get the loss-making airline of its books it would have to allow the buyer to fire tenured staff and start over with a new business model.
This, of course, is something that airline workers’ unions would never allow, as working for Air India is considered as being a job for life.
08/12/19 Mark Finlay/Simple Flying
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According to an unnamed source in Prime Minister Narendra Modi’s government, tourism website Skift which is Nordic for “shift” or “transformation” is reporting that India is considering amending a foreign ownership rule when it comes to domestic airlines.
When you look at airline ownership rules in India it is a little misleading as the country allows 100% ownership in India-based airlines providing they have government approval.
The truth, however, is that foreign investment in Indian airlines is limited to a 49% stake like Singapore Airlines stake in Tata-owned Vistara.
The reason why the Indian government wants to relax its rule on foreign airline ownership is that it cannot find a private buyer for state-owned Air India.
Debt-laden and overstaffed with around 12,000 employees who enjoy incredible benefits like medical insurance for their entire families for life, if Air India was a horse it would have been shot already.
On a domestic level as a full-service airline, it cannot compete with the private sector and the airfares offered by the likes of Spicejet and IndiGo.
Internationally it has to compete with Gulf carriers Emirates, Qatar, and Etihad who quite honestly provide a better service with more connections to the India subcontinent than Air India could ever manage.
The only thing Air India has that could be enticing to a foreign buyer is coveted landing slots at some of the world’s major airports.
Seriously though, if the Indian government wants to get the loss-making airline of its books it would have to allow the buyer to fire tenured staff and start over with a new business model.
This, of course, is something that airline workers’ unions would never allow, as working for Air India is considered as being a job for life.
08/12/19 Mark Finlay/Simple Flying
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