SpiceJet, GoAir better placed for FDI: KPMG

Moneycontrol Bureau

Low fare airlines SpiceJet and GoAir with their good financial and operational performance are better placed for foreign direct investment (FDI) believes consulting firm KPMG which released a report on the sector today.

The firm has pointed out there will be lot of interest from global carriers in the Indian airlines  post the government allowing 49% FDI in the sector, which was a long pending demand by industry captains.

Explaining its rationale as to why international carriers would be keen on investing in Indian airlines, the firm gave instance like Emirates looking at a 52% increase in the number of weekly seats on the India sector, which could be a trigger for its investment in an airline that best suits its requirements.

Second, the report points out that Lufthansa has recently inked a strategic alliance with Jet Airways which allows both carriers to sell seats on each other's network.

The report further said, “Qatar Airways, Etihad, Singapore Airlines and AirAsia have also indicated their expansion plans for India. Allowing FDI for global airlines may lead to significant action over the next 12-18 months."

The firm has also expressed concerns for Kingfisher Airlines which is going through a rough patch due to its operational inefficiencies, huge debts, accumulated losses and low asset base which could be a dampener.

"Jet and IndiGo have high foreign holding already and their promoters have not indicated any intention to divest their stake at the moment. Air India is currently out of bounds for global investors,"  it said.