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 Airways.

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