Qatar Airways backs FDI in aviation

November 23rd, 2011 - 5:32 pm ICT by IANS  

Kolkata, Nov 23 (IANS) Stating that Indian carriers lacked sufficient financial strength to grow, a top Qatar Airways official Wednesday welcomed the commerce ministry’s recommendation allowing 26 percent foreign direct investment (FDI) by foreign airlines in domestic carriers.

“It is a very good move by the government. The airline industry is very capital intensive and I don’t think the private Indian carriers have the funds to achieve the growth they desire,” Qatar Airways chief executive officer Akbar Al Baker said here.

A draft cabinet note by the Department of Industrial Policy and Promotion (DIPP) under the union commerce ministry has recommended allowing 26 percent FDI by foreign airlines in domestic carriers.

Presently, overseas entities, other than foreign airlines, are allowed to invest up to 49 percent in domestic passenger airlines. Non-resident Indians can invest upto 100 percent.

Several private carriers, including Vijay Mallya’s Kingfisher Airlines have been seeking FDI in the industry.

Baker said tie-ups and mergers were the way forward for debt-ridden Indian carriers.

“Mergers and tie-ups are a good way forward but it is essential that they are done with commercial motive. Often, mergers are ego driven resulting in financial losses, so they must be carefully planned before executing,” said Baker.

He also said the ideal cap for FDI was 49 percent as it would enable the foreign players have a greater say in policy matters.

“The industry being capital intensive, it is very essential that the organisational structure is slim and it is operated efficiently. The margin in this industry is low, so efficiency is the key,” he added.

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