Foreign airlines ''wait & watch'' mode on aviation FDI

Major foreign airlines seem to have adopted a wait-and-watch approach over the government's decision to allow them to pick up 49 per cent stake in Indian carriers, even though the government says the mood in the industry was upbeat.

Air India has been kept out of the ambit of this major policy announcement, but there have been reports about a couple of Indian carriers holding preliminary discussions with foreign airlines to attract investment.

A day after notifying the FDI rules, Civil Aviation Minister Ajit Singh said the aviation sector was passing through a difficult phase due to the economic slowdown, but "the mood is upbeat after the government has allowed 49 per cent FDI in domestic airlines".

However, barring Abu Dhabi-based Etihad Airways, many of the major foreign airlines have said they currently do not have plans to invest in Indian carriers.

Aviation think-tank Centre for Asia Pacific Aviation (CAPA) also said, "The floodgates of investment are unlikely to open in the short term but from the perspective of improving sentiment and demonstrating that the government is committed to supporting the development of a viable airline industry, this is a positive milestone".

Etihad spokesperson has been the only one so far to have made a positive statement, saying, "Equity investment strengthens our relationships and allows us to work together with partners to identify revenue generation and cost management opportunities.

"We see equity as a positive reflection of our partnership approach. We will make such investment where we believe the commercial prospects are strong, where we see like-minded business philosophies," he said.

No-frill carrier SpiceJet recently held talks with an unidentified Gulf-based carrier for investment. Its officials had last week held "preliminary discussions" with a Gulf airline for potential investment, but no details were available. .