Ajit Singh eyeing FDI in Indian carriers

Govt is looking at allowing foreign airlines to invest in domestic carriers,Aviation Minister said.

Written by Agencies | Bangalore | Published: July 17, 2012 10:03 pm

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

“FDI is already allowed in airlines up to 49 per cent. We are not changing that 49 per cent,” 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” themselves 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.”

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.

The Ministry would soon amend rules to promote air connectivity to smaller towns by binding Indian carriers to buy smaller planes to operate to these destinations in the hinterland,the Civil Aviation Minister said.

The government would “soon modify guidelines for acquisition of aircraft so that Indian carriers become bound to acquire smaller aircraft needed for providing connectivity to these smaller cities,” Singh told a Parliamentary Consultative Committee earlier.

The Ministry was also in the process of enhancing helicopter operations and construction of heliports at various places to improve the connectivity of smaller places,including those of religious and tourist importance,with bigger cities,an official release said.

The Route Dispersal Guidelines,which make it mandatory for all airlines to operate to the Northeast,Jammu and Kashmir and the island territories,were being amended to provide direct subsidy to encourage the air carriers to fly on these remote and interior routes,he was quoted as saying.

A proposal to create an Essential Air Services Fund (EASF) was also being considered,he said. Official sources said this fund could be used to cross-subsidise air travel to such routes.

The Bureau of Civil Aviation Security (BCAS) would be restructured and a dedicated aviation security force would soon see the light of the day,he added.

Singh also underlined the need to develop India as an international hub for passengers,saying the Ministry had initiated action in this regard,including revisiting the policy regarding bilateral air service agreements.

A proposal to set up a National Aviation University was also being brought with the aim of creating an aviation training hub to meet the requirements of India and other countries in the region.

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