Indian Government Set To Renege on Commitment To Allow Foreign Investment in Airlines
AIN Air Transport Perspective by Neelam Mathews Indian airlines want to be bolstered by foreign investment. April 30, 2012, 11:10 AM As highly taxed fuel, mounting debt and aggressive ticket pricing stifle the fledgling airline industry in India, the government seems ready to renege on its promise to allow foreign direct investment (FDI) in the country’s carriers. Current rules do not permit foreign airlines to invest in domestic carriers, although non-aviation-related investors can hold up to a 49-percent stake. The government’s apparent intention to break its promise to liberalize the industry traces its roots to political wrangling and an effort to woo rebellious factors of the ruling Congress Party. Burdened with a combined debt of $20 billion, Indian airlines have lost $2.5 billion in the fiscal year ending March 2012, according to Australia-based consultancy Center for Asia Pacific Aviation. “This [FDI] has always been a sensitive issue but the recent debate has been cloud...