Foreign airlines losing enthusiasm on Indian aviation FDI proposal

Global airlines are not overly enthused by the Indian Government's proposed move to allow foreign airlines to acquire stake in domestic carriers. The Government is expected to take a call soon on allowing foreign direct investment (FDI) in the domestic aviation sector. The proposal has already been sent for inter-ministerial circulation before being placed before the Union Cabinet for a final decision.

View point of the Chief Executive Officer, International Airline Group (IAG), Mr Willie Walsh on an annual general meeting of the International Air Transport Association:

“I have been hearing about the proposed policy change for at least five years. For me India was an attractive destination for British Airways to “serve” although it might not be an attractive destination to invest in”.

The reason is that the Indian Government continues to provide financial support for Air India which, in my mind, distorts competition. Part of the problem in India is caused by the Government's continued support to the inefficient state-owned airline. If there was a change in Government policy, IAG would look at it. IAG is the holding company of British Airways and the Spanish carrier, Iberia. It is one of the world's largest airline groups, with 400 aircraft flying to over 200 global destinations.

Chief Executive Officer, OneWorld, Mr Bruce Ashby stated that it was possible for international airlines to look at investing in India. He also pointed out that foreign airlines’ investing in domestic carriers was something that happened around the world.

President of Emirates Airlines, Mr Tim Clark, said that from an “arm's length”, investing in an Indian carrier seemed okay. “But then if you work the practicalities (like) high fees at the airports, then it does not look that attractive”.

Despite these responses, Kingfisher and SpiceJet are among the Indian carriers that have attracted foreign airlines' interest.

Chief Executive Officer, SpiceJet, Mr Neil Mills recently stated that “Airlines from the Gulf and South-East Asia had shown “speculative interest” is acquiring a stake in the carrier”.

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