Foreign airlines on ‘wait-and-watch’ mode

Major foreign airlines seem to have adopted a wait-and-watch approach over Indian government’s decision to allow them to pick up 49 per cent stake in Indian carriers, even though the government says the mood in the industry was upbeat. Air India has been kept out of the ambit of this major policy announcement, but there have been reports about a couple of Indian carriers holding preliminary discussions with foreign airlines to attract investment. A day after notifying the FDI rules, India’s Civil Aviation Minister Ajit Singh said the aviation sector was passing through a difficult phase due to the economic slowdown, but “the mood is upbeat after the government has allowed 49 per cent FDI in domestic airlines”. However, barring Abu Dhabi-based Etihad Airways, many of the major foreign airlines have said they currently do not have plans to invest in Indian carriers. Aviation think-tank Centre for Asia Pacific Aviation (CAPA) also said, “The floodgates of investment are unlikely to open in the short term but from the perspective of improving sentiment and demonstrating that the government is committed to supporting the development of a viable airline industry, this is a positive milestone”. Etihad spokesperson has been the only one so far to have made a positive statement, saying, “Equity investment strengthens our relationships and allows us to work together with partners to identify revenue generation and cost management opportunities. “We see equity as a positive reflection of our partnership approach. We will make such investment where we believe the commercial prospects are strong, where we see like-minded business philosophies,” he said. No-frill carrier SpiceJet recently held talks with an unidentified Gulf-based carrier for investment. Its officials had last week held “preliminary discussions” with a Gulf airline for potential investment, but no details were available. Reports also spoke of Jet Airways’ officials holding talks with airline companies in the Middle East, but sources said these talks could be on code share and need not necessarily be aimed at attracting investments. A spokesperson for International Airlines Group (IAG), the holding company of British Airways and Spain’s Iberia, said, “Our aim is to be a global airline group and we are pleased with any steps towards full liberalisation of the aviation industry. India is a key market for IAG and we will monitor the changing regulatory environment but at this stage we have no plans to invest in any Indian airlines.” Similarly, Singapore Airlines, which had partnered with Tatas to participate in AirIndia divestment in 1997 but later shied away, is also on wait-and-watch mode. From gulftoday