Airline equity gets thumb down

The Civil Aviation Ministry had sought the opinion of an international aviation expert before shelving one of the Naresh Chandra Committee...

The Civil Aviation Ministry had sought the opinion of an international aviation expert before shelving one of the Naresh Chandra Committee8217;s key recommendations on allowing 49 per cent foreign equity in Indian carriers. The expert from the International Air Transport Association IATA had advised against immediate implementation of the proposal. It8217;s learnt the Ministry had consulted Pierre J. Jeanniot, IATA Director General Emeritus, for his expert opinion on the recommendations of Naresh Chandra Committee, which were submitted last December.

While agreeing with the bulk of the report, Jeanniot advised the government against implementing the foreign equity recommendation. Jeanniot observed in his note: 8216;8216;A premature implementation of this proposal could further exacerbate the current over capacity issue and negate the current efforts to improve the financial viability of your carriers.8217;8217;

In a letter dated December 17, 2003, he observed that while this was a 8216;8216;bold recommendation8217;8217;, it should be considered as a long-term vision than for immediate implementation. According to him, the government should first concentrate on improving the performance of Indian carriers and turn them into world class airlines.

8216;8216;I would respectfully suggest that you should first focus on the expansion and strengthening of your current government-owned and privately-owned airlines so as to achieve a credible voice in any worldwide restructuring of the airline industry which has started to unfold.8217;8217;

Jeanniot observed that at present there could be 8216;8216;more downsides to such a foreign participation than upsides, and that would need to be very carefully exmained8217;8217;.

His opinion, sources said, proved to be the crucial input which resulted in the recommendation being left out of the draft Civil Aviation Policy that was tabled before the Cabinet in February. Jeanniot felt that the bulk of the recommendations made by the committee were pertinent and some of them needed to be urgently implemented for the revival of the Indian civil aviation industry.

In particular, he suggested that private carriers should be allowed to fly abroad while the government must bring down excise duties, sales tax on aviation turbine fuel and grant airlines the freedom to source fuel from suppliers of their choice.