Fdi in Aviation

Topics: Airline, Regional airline, Airport Pages: 6 (1926 words) Published: November 13, 2012
Introduction –
[pic] New Delhi, Sep 21 (IANS) Civil Aviation Minister Ajit Singh Friday said the government's open-sky policy for foreign investment in domestic airlines has positively affected sentiments in the aviation industry, but it is too early to say how much investment the sector would attract."The sector is going through difficult times and is facing financial stress due to the overall economic slowdown. But the mood is upbeat now after we (government) allowed 49 percent FDI in airlines," Singh told reporters on the sidelines of an Assocham event here."Time will tell how many foreign airlines are interested," Singh added a day after the government notified that the foreign airlines can now pick up 49 per cent stake in domestic passenger carriers.Foreign carriers have so far not been allowed to directly invest in Indian carriers for security reasons, although 49 percent FDI by non-airline players was allowed.The Indian airlines sector has been going through a tough operating environment as high fuel and interest cost have hurt it. The government expects that the decision will help bring in more funds to the airlines who have been cold shouldered by banks.The decision is particularly expected to help airlines like Kingfisher to gain capital and resume full services. Other Indian carrier's require funds for expansion and to gain market share.International airlines have welcomed the government move. Ccarriers like Singapore Airlines, Emirates and the International Airlines Group (IAG), which owns British Airways and Iberia, have said they do not have any immediate plans to invest in India.Virgin Atlantic and Lufthansa also said they were not keen on investing in India at the moment.Middle East airline Etihad Airways has said it will wait for all the modalities of the new reforms are clear.Several such overseas carriers contacted by IANS and aviation watchers said high jet fuel cost, an extremely price-sensitive market, huge debt of the carriers and contracting domestic passenger traffic are the reasons deterring them to invest.

Fdi in aviation
[pic] After allowing foreign airlines to buy stake in domestic carriers, the civil aviation ministry is considering issuing around 30-40 licences for non-scheduled operations. A top ministry official said that many aviation companies have shown interest in starting non-scheduled operations, which do not have a fixed schedule. According to sources, some of these companies have come up with renewed proposals to the ministry. This has renewed the interest of the ministry, which is now working on issuing some licences. Officials said that regional connectivity will get a boost following the decision on allowing 49 per cent foreign direct investment in the sector. "Till recently, we were not convinced with the feedback we got from DGCA (Directorate General of Civil Aviation). Now, we can think of issuing licences to non-scheduled Indian aviation companies who have come to us with foreign tie-ups as well. We are sure the new tie-ups in non-scheduled operations will definitely bring in good technology and result in better maintenance of aircraft," said a senior official. Non-scheduled operators are carried on mostly by VIPs or flying schools, and corporate as well as government organizations. They largely have major safety issues, which has deterred the ministry from issuing such licences. Their operations remain largely free from surprise safety audits. According to Planning Commission estimates, non-scheduled operations could involve 300 business jets, 300 small planes and 250 helicopters during the 12th Plan (2012-17) owing to increasing demand. Many regional airlines that have either started or will begin their operations soon include G.R. Gopinath's Deccan Shuttle, which would offer connectivity within Gujarat. The state has good regional airport network and has non-scheduled operations being carried by like Air Mantra, owned by corporate groups. Until now, foreign...
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