Indian State-owned Air India has warned the Union government that allowing investments by foreign airlines will hurt the interests of domestic airlines and prevent Indian airports from developing into international hubs. The government should study the potential impact of such investment on the domestic aviation sector as a whole, Chairman and Managing Director (CMD) Rohit Nandan wrote in a letter to Aviation Secretary KN Srivastava in December, sources said.
NandanÂ’s letter has prompted the Aviation Ministry to start work on introducing guidelines to address the concerns, but it is unclear how far it can go beyond clearing investments by foreign airlines in domestic ones on a case-by-case basis, the sources said. The guidelines are expected to be ready in a few weeksÂ’ time.
In last September, India allowed foreign airlines to own up to a 49 per cent stake in local airlines, accepting a demand by cash-strapped domestic airlines to help shore up their capital and reduce debt. Jet Airways (India) and Kingfisher Airlines have since begun stake-sale discussions with Abu Dhabi-based Etihad Airways PJSC.
Last week, Jet indicated it might be closer to a deal with the West Asian airline than Kingfisher, whose licence to fly lapsed on 31 December. Nandan wrote in his letter to Srivastava that the liberalised FDI policy could hurt local airlines because overseas airlines may choose to use Indian airlines mainly as feeder services for their own operations, said the sources.
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