The government’s move to allow foreign carriers to invest in cash-strapped domestic airlines is unlikely to usher in benefits unless issues of high-taxes and infrastructure cost are addressed, says global airlines body IATA. The decision, however, is positive and opens up wider opportunities for overseas players.
Allowing foreign direct investment by global airlines by itself is not a panacea. The critical problems of a high cost environment, insufficient infrastructure and crippling taxes must also be addressed within a co-ordinated government-wide policy framework.
Centre for Asia Pacific Aviation said the government should rationalize the very high cost structure for airlines for FDI to become a real success. Aviation turbine fuel price tops the list of areas that need focus.
Some foreign carriers were planning to launch startups here with local partners if FDI is cleared. IndiGo and Jet Airways, that already have substantial foreign ownership, may not benefit immediately from FDI.
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