The aviation industry, on Friday, welcomed the government’s decision to allow foreign airlines to pick-up up to 49 per cent in Indian carriers.
“The decision is good and is in the interest of the common man. With more competition, fares will come down. Some airlines are lobbying against this because they do not want competition,” said Captain GR Gopinath, founder, Air Deccan, and Chairman, Deccan Aviation.
“Now the government must address the concerns of foreign airlines regarding taxation issues so that they come. Rather than existing airlines getting benefited by this decision, new airlines without any legacy issues can start operation with investment from foreign airlines. India has not seen the birth of an airline in last eight years,” said Captain Gopinath.
A little too late
Kingfisher Airlines Chairman Vijay Mallya had lobbied for allowing FDI from foreign airlines but the decision came too late to accrue any tangible benefit for his troubled airline.
“We are pleased. This will open up wide range of opportunities. Kingfisher will now be able to re-engage with prospective airline investors in a more meaningful manner and more towards recapitalization,” the airline said in a statement.
“The decision is good and for SpiceJet and Go Air, it will be a game changer,” said Jitender Bhargava, former executive director, Air India.
Jet Airways said, “We welcome any policy initiated by the government.”
Earlier, aviation stocks gained substantially during the day on the back of this move. Kingfisher gained 8 per cent, SpiceJet, 4.39 per cent and Jet Airways 2 per cent on the BSE. Some foreign airlines that are willing to invest are British Airways, Emirates and Etihad Airways.
“It was a long awaited move. This would help carriers induct fresh equity that can be used to pay off debts. It would also stimulate the incubation of new airlines,” said Ankur Bhatia, ED, Bird Group.
“More than funds inflow, the move will help in bringing best practices to the Indian aviation sector and improve the safety and legal compliance aspects as well as corporate governance standards,” said Ramesh Vaidyanathan, Partner, Advaya Legal