Air India has notified the government that agreeing to
investments by foreign airlines will wound the interests of
domestic airlines and prevent Indian airports from rising into
global hubs. The government ought to learn the likely shock of such
investment on the domestic aviation sector as an intact, chairman
and managing director (CMD) Rohit Nandan noted down in a letter to
aviation secretary K.N. Srivastava in December, as per the two
government officials, who refused to be named.
Nandan's letter has provoked the aviation ministry to begin
work on setting up guidelines to talk to the concerns, but it is
indistinct how far it can go further than clearing investments by
overseas airlines in domestic ones on a case-by-case basis, one of
the two officials said. The guidelines are expected to be ready in
a few weeks' time. India in September permitted foreign
airlines to make personal to a 49% stake in local airlines,
accepting a demand by cash-strapped domestic airlines to aid shore
up their capital and lessen debt.
Nandan wrote in his letter to Srivastava that the opened FDI
policy could harm local airlines because abroad airlines may decide
to use Indian airlines primarily as feeder services for their
personal operations, said the official quoted above. The department
of industrial policy and promotion has inquired the aviation
ministry to get ready sectorial limits, but "we don't
recognize what could be done", said the second official.
"Maybe we will get them on a case-by-case basis," he
said, referring to investments by overseas airlines in India.
Air India has basis to be concerned about it's privately run
opponents getting an improvement from foreign airline investments
that could weaken its own competitive border. Troubled by high
liability and other operational hassles, the nationalized firm is
relying on a taxpayer-funded $5.8 billion bailout to keep on in
business. An instant risk is the possible Jet-Etihad deal.
"Most of the countries that agree to foreign carrier
investments in domestic airlines are countries with firm
capitalistic ideals and practices. It is the endurance of the
fittest," said Steve Forte, former chief executive at Jet
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