BUSINESS

Qatar’s airline plan faces turbulence

Rules to flyAccording to the present norms, an air operator permit is granted to a company only if it is registered in India.

Rules to flyAccording to the present norms, an air operator permit is granted to a company only if it is registered in India.  

The Gulf State’s flag carrier is facing opposition from Indian airlines over ownership, control norms

Qatar Airways’ plans to set up a fully foreign entity-owned airline in India may not take off any time soon as the Indian government has put its proposal to dilute the substantial ownership and effective control (SOEC) clause on the back burner following opposition from the domestic airline operators.

“The proposal to amend the SOEC norms by amending the Aircraft Rules, 1937 was put on hold following some objections raised by the Federation of Indian Airlines (FIA),” a senior Civil Aviation Ministry official said, on condition of anonymity.

Akbar Al Baker, chief executive officer of Qatar Airways, the state-owned airline of Qatar, on Wednesday announced a plan to set up a 100%–owned domestic carrier in India along with its government’s investment arm, Qatar Investment Authority. During an interaction at the ITB Berlin travel show he said that the airline will be making an application soon to Indian officials.

FDI limit

In June last year, the Centre had raised foreign direct investment (FDI) limit in scheduled commercial airlines to 100% from 49%. However, a foreign carrier can only invest up to 49% to set up a domestic airline in India and the rest, up to 51%, has to come from local or foreign investors including airports and sovereign fund.

SpiceJet chairman and managing director Ajay Singh and IndiGo President and Whole-time Director Aditya Ghosh are slated to meet Civil Aviation Secretary R.N. Choubey on Friday and are expected to raise the issue of allowing Qatar Airways to set up a fully owned foreign airline in India, airline sources said.

“It is the policy of the government to welcome FDI in the civil aviation sector,” Mr. Choubey told The Hindu .

“As far as the specific case is concerned, it has to go through the approval route because as per media reports, they are planning to invest more than 49%. So, once they put in their application, then the process of approval will start and a final call will be taken.”

The Centre is yet to finalise a draft notification issued in November to dilute SOEC clause for airlines in the Aircraft Rules, 1937, to give effect to its new FDI policy.

Mr. Choubey said the draft notification to dilute the SOEC norms is “under finalisation” stage at the ministry.

Indian registration

According to the present rules, an air operator permit is granted to a company only if it is registered in India, the Chairman and two-third of its directors are Indian citizens and the substantial ownership and effective control (SOEC) is vested in Indian nationals.

Relaxing norms

The Centre has proposed to dilute these norms by doing away with the SOEC clause and allowing just one-third directors to be Indian citizens against two-thirds prescribed at present.

“No country in the world allows its airlines to be owned and controlled by foreign entities,” FIA Associate Director Ujjwal Dey told Mukul Roy, Chairman, Parliamentary Standing Committee on Transport, Tourism and Culture in a letter dated February 15. “Even proponents of free market economies such as the USA and Canada, allow only 25% of voting rights to foreign nationals and entities.”

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