The focus of Indian airline companies seems to be shifting from chasing consumers to chasing capital. Almost all of them are wooing private equity investors to rope in some money. And while PE players are more than keen to invest in the Indian aviation market, they are holding back.

Deccan struggeld for over six months to rope in private equity players, Go Air has been in the market for over a year. In fact, almost all airlines in India have been working hard to crack a deal with investors - but with little luck!

Private equity investors say that in most cases, the valuation expectations of promoters are much higher than what the investors are willing to bring in.

According to industry estimates, the aviation sector as a whole requires investment of USD 20 billion over the next few years. And while private equity investors are keen to set foot in India, they are equally skeptical. Some do admit that external factors like fuel prices and infrastructure bottlenecks have contributed to the USD 550 million loss of the airline companies. But the numbers do not seem to be getting better

Navin Wadhwani, MD, NM Rothschild India said, “There is no clear indication on the path to profitability.”

PE players also say that managements of most airlines in India are not very conducive to attracting investments. Promoters of most airlines continue to be the single largest shareholder and active managers. There is also lack of professional management in most companies. And if these were not enough reasons, the laws of the land are turning investors away

Bill Franke, MD, Indigo Partners said, “The laws are difficult. The valuations are based on the public listed value.”

Some PE players also point out that most Indian airline companies opted for a public listing very early in their lives. Their poor performance on the bourses will now make it difficult for them to go back to the public. So it looks like Indian aviation can fly high only on the wings of private equity investors.