Govt looking at FDI by foreign airlines in Indian carriers

The government is looking at allowing foreign airlines to invest in domestic carriers but there would be no change in FDI cap of 49%, Civil Aviation minister Ajit Singh said today.

"FDI is already allowed in airlines up to 49%. We are not changing that 49%," Singh told a press conference after a meeting of the consultative committee of
his ministry, and a separate interaction with players of aerospace industry here. "But what we are trying to do....right now other (foreign) airlines are not supposed to participate in the FDI (foreign airlines can't invest in Indian carriers)...We are trying to see if other airlines are also allowed to
participate (in the FDI)," he said.
Singh argued the airlines business is a complicated one and only airlines would be interested in investing in other carriers. He pointed out that Indian banks have "over-extended" hemselves to airlines and they are not willing to giving more money to the sector. To a question if Air India has approved a voluntary retirement scheme for 5,000 employees at a cost of Rs 800
crore, Singh said, "Air India has been looking at it and the Board approved it."
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He said the VRS was not meant for engineers and pilots but for ground-handling and staff of that kind. Singh said the government would introduce a bill in the winter session of Parliament to replace Directorate General of
Civil Aviation with Civil Aviation Authority to give it "autonomy to hire" and "financial independence". He stressed DGCA and Airports Authority of India (AAI) need to be revamped and strengthened as environment for civil aviation had undergone a sea change in recent years in terms of technology, modernisation of airports, number of aircraft and passengers.
On the ailing Kingfisher Airlines, Singh reiterated no government bailout was possible. He said the Cabinet Committee on Economic Affairs was expected to take a decision within the next 10-15 days on the "compensation package" to be paid by Boeing to Air India for delay in delivery of three Dreamliners.
"They have a proposal. Air India Board has considered it. We have made a proposal to the Cabinet," he said. Air India is seeking a compensation package from Boeing for delay in production of the planes by four years.
 He said airlines in India "seem to be in financial trouble", and their loss last year was in excess of Rs 10,000 crore. "I am sure the problems that airlines are facing are temporary. There is very bright light at the end of the
tunnel. And I hope that in the next six months or one year, they will come out the fiscal stress," Singh said.
Singh said the government would introduce a bill in the winter session of Parliament to replace Directorate General of Civil Aviation with Civil Aviation Authority to give it "autonomy to hire" and "financial independence". He stressed DGCA and Airports Authority of India (AAI) need to be revamped and strengthened as environment for civil aviation had undergone a sea change in recent years in terms of technology, modernisation of airports, number of aircraft and passengers.
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On the ailing Kingfisher Airlines, Singh reiterated no government bailout was possible.  He said the Cabinet Committee on Economic Affairs was expected to take a decision within the next 10-15 days on the "compensation package" to be paid by Boeing to Air India for delay in delivery of three Dreamliners.
"They have a proposal. Air India Board has considered it. We have made a proposal to the Cabinet," he said.  Air India is seeking a compensation package from Boeing for delay in production of the planes by four years. He said airlines in India "seem to be in financial trouble", and their loss last year was in excess of Rs 10,000 crore.
"I am sure the problems that airlines are facing are temporary. There is very bright light at the end of the tunnel. And I hope that in the next six months or one year, they will come out the fiscal stress," Singh said.