Foreign carriers could have stake in domestic airlines: Minister

January 14th, 2009 - 2:34 pm ICT by IANS  

New Delhi, Jan 14 (IANS) The government should consider allowing foreign airline operators to own up to 25 percent stake in Indian carriers, Civil Aviation Minister Praful Patel said here Wednesday. “We have not taken a formal decision on this. But I think it is high time we explore this as an option to bring in more investment,” Patel told reporters on the sidelines of an international oil conference here.

“We can look at 25 percent stake by foreign carriers in domestic carriers,” he added.

At present, foreign carriers are not allowed to invest in Indian carriers, though non-aviation foreign companies can own up to 49 percent stake.

The Indian airline industry is ailing, and it is feared that it could lose close to Rs.100 billion (Rs.10,000 crore or $2 billion) this fiscal.

Operators such as Kingfisher Airlines have been lobbying to allow foreign carriers to pick up stake in domestic carriers. Foreign carriers such as British Airways, Lufthansa, Emirates, Singapore Airlines and Virgin Atlantic are understood to have shown interest in Indian carriers.

Earlier, in his address at the conference, Patel said the Indian aviation sector had seen a slowdown by at least 5 percent last year.

“We grew by 25 percent in 2005. In 2006 we had a growth of over 30 percent while in 2007 it was even more. But in 2008, we saw a 5 percent slowdown in the aviation sector,” the minister said.

“When the prices of aviation fuel was brought down, it gave some relief to the aviation industry. It had a positive impact and helped the sector,” Patel added.

Referring to the economic slowdown worldwide, he said the aviation sector too has suffered. “It (the meltdown) has had a cascading effect on various sectors. Aviation cannot remain immune to it.”

Patel said the government’s decision to allow Bangalore International Airport Ltd (BIAL) to charge a user development fee of Rs.260 from Jan 16 would prevail. “But it could be reviewed once the AERA (Airport Economic Regulatory Authority) comes into being,” he added.

AERA, the new airport regulator for the aviation industry, is expected to be set up by March.

Additionally, he said, the government could also allow the Delhi and Mumbai airport developers to levy an airport development fee (ADF) on passengers for about two years to overcome the liquidity crunch arising from the poor response to their real estate projects and falling passenger numbers.

“ADF is an ad hoc decision and would be not be in place for not more than two or two-and-a-half years,” Patel said.

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