FDI in aviation: Lukewarm response from foreign airlines

New Delhi: The decision to bring in FDI in aviation got a rather lukewarm response. While cash strapped Kingfisher airlines welcome it and their morale is up for now, several foreign players were more circumspect.

But the big question who will invest in Indian carriers with struggling finances? Sources at Kingfisher airlines tell CNN-IBN that talks with either Qatar or Etihad airlines will now resume. Kingfisher reported losses of over Rs 2,000 crores. Sun group-run Spicejet is in talks with Emirates, one of the largest foreign airlines to operate out of India, confirm sources in the airline, but Emirates is not willing to confirm for now.

President, Emirates Airlines Tim Clark said, “We are looking, we are very interested in civil aviation in India but we are not getting involved in investment with some of their carriers.”

While cash strapped Kingfisher airlines welcome it, several foreign players were more circumspect.

European carriers like Lufthansa and British airways also view Indian market with a lot of promise. The passenger traffic has been growing at a very healthy double digit rate and according to Boeing could be the largest in the world in 20 years. Government support to Air India could be a stumbling block.

CEO, British Airways Willie Walsh said, “As long as the Indian government continues to provide support for Air India, it distorts the market, it distorts competition, it creates uneven playing field and I can't see how many airlines would be interested in investing while the market continues to be like that.”

Domestic carriers like Indigo and Jet who have made the most of the fall of Kingfisher and Air India believe that the FDI decision will hamper growth of the airlines. So Industry experts believe that it's a sell out, but the Civil Aviation Minister Ajit Singh believes that there are enough safe guards.

“This will not be automatic through they have to get clearance from the ministry and FIPB. Also according to 1937 aircraft rules the 3/4th of the directors to be Indian and Chairman has to be Indian. India has to hold sustentative amount of investment in that airline,” Singh said.

The next few months will see hectic activity, if the investments do fall in passengers will gain the most with low fares and access to modern aircraft. But will Indian carriers be able to stand their ground and compete? Only time will tell.

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