NEW DELHI: The government's move to finally clear FDIby foreign airlines into desi carriers is being seen as the most critical first step towards making Indian aviation a viable sector. Both top airline and aviation ministry officials say that the country's cost-unfriendly character towards the sector will need to change to attract money and expertise of foreign airlines or to make big foreign airlines launch new startups here with Indian partners.
"It may not immediately change things for Indian carriers," said Centre for Asia Pacific Aviation (CAPA) India head Kapil Kaul. Issues like prohibitive jet fuel pricing and airport charges would need to be relooked to make investing in an Indian carrier profitable for anyone.
Despite the roadblocks, CAPA and the industry insiders feel that SpiceJet and GoAir will be the first gainers from the move. "This policy change would give Kingfisher an outside chance for survival. But it needs to change a number of things before that. IndiGo and Jet are already close or over the 49% foreign ownership that is talked about," Kaul said.
Kingfisher chief Vijay Mallya, who is banking on FDI to save the airline, claimed he was unaware of the government's latest move for clearing FDI. "I am in a meeting in Europe and have not heard of anything (on FDI)," Mallya said. His crisis-ridden airline has debt of over Rs 8,500 crore and has not paid salary for even March to many employees.
While Kingfisher's survival is linked to this move, UPA's long delay on FDI in aviation had made even foreign airlines switch off. The CEO of an Indian carrier, which is a prime contender for FDI, said: "Foreign airlines got tired of the kabhi haan, kabhi naa thing on FDI. We are in talks but they did not get a due diligence done as that costs money and the foreign airline wants to get it done at a time when they can actually put money."
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