Indian skies unattractive for FDI

It has been nearly two months since the government opened up the skies to FDI in aviation, but till date no foreign carrier has flown in to buy a stake in any Indian airline. While some, especially cash rich middle-east players like Emirates and Etihad, have afforded only a lukewarm response, foreign low cost carriers say that there is a lot more that needs to be done if they are to fully tap the huge market here.

Sunanda Jayaseelan of CNBC-TV18 reports what international low cost carriers are making of the post-reform aviation sector in India. It has got the green signal, but FDI in aviation is yet to take-off in India. While full service carriers are moving cautiously, low cost carriers like Air Arabia says its wings are being clipped. India, is the perfect market for a low cost carrier (LCC), according to Adel Ali Group CEO, Air Arabia, who’s company entered India in 2007. However, he says, there are a lot of issues that need to be urgently addressed for low cost carriers to fly smoothly,  like taxes at airports and bilateral air service agreements. And even though at present, it is mostly LCCs who have managed to ride out the turbulence better than full service carriers, experts like Indigo Partners, a PE firm which has invested in airlines globally, says the government needs to do more to help them keep afloat. Looking ahead, Air Arabia, which connects 13 Indian cities to its hub in Sharjah right now, says it is closely watching the government's plans to modernise 35 regional airports, as that could influence it's future flight path. USL-Diageo deal: Mallya says KFA is separate issue