Geetanjali Shukla
After much back and forth, the
government has finally allowed foreign airlines to buy up to 49 per cent stake in Indian carriers. This move is expected to provide much-needed relief to the debt-laden airlines in India.
Analysts, industry experts, and more importantly, airlines are hailing this as a positive move.
Vijay Mallya-owned Kingfisher Airlines in an official statement after this announcement has said, "Kingfisher will now be able to re-engage with prospective airline investors in a more meaningful manner." The airline, reeling under a debt burden of nearly Rs 8,000-odd crore, feels it can now recapitalise itself and ramp up operations.
However, some analysts feel that despite Kingfisher having finally got the much-wanted policy change, there is a slim chance of the airline finding an international suitor. They feel that without assets (planes), slots, and big debt, it is nearly impossible for the carrier to find an international airline investor.
SpiceJet had earlier this week stated that it has had "preliminary discussions" with a Gulf airline for a potential investment. The airline in question, say industry insiders, is most likely the UAE-based Etihad Airways, which has stakes in airlines outside of the Gulf like Air Berlin, Air Seychelles, and Virgin Australia. The Wadia Group-owned GoAir, which has until now maintained that it will not evaluate any proposals until the FDI decision comes through, is also a good candidate with the policy change in place. Says an analyst with a multi national consultancy, "
SpiceJet and GoAir are good candidates since their promoters are financial investors. Unlike IndiGo where the promoters are aviation professionals."
With global airlines bogged down by the slowdown in Europe, high fuel costs, and economic slowdown, cash-rich and fast-growing Gulf carriers such as Dubai's Emirates, Qatar Airways and Abu Dhabi's Etihad are seen as the most likely buyers of stakes in Indian carriers, according to analysts. The Gulf carriers have already ramped up their investment in Australia. Emirates recently signed a 10-year accord with Qantas which means the Australian carrier will now work with Emirates on European routes and not British Airways, its earlier partner. Etihad recently doubled its stake in Virgin Australia to 10 per cent. Not being part of any global airline alliances, the Gulf carriers have always looked at relaxation in ownership curbs to grow their presence in international markets.
But whether we see more action from Gulf carriers in India or not, this policy amendment, say experts, could also lead to is the establishment of new airlines in India. So all in all, after a few years of struggle, the aviation sector with Friday's decision does look poised for some big-ticket action.
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