In less than a month of taking charge as Union civil aviation minister,Ajit Singh has proposed permitting foreign airlines acquire up to 49 per cent stake in domestic carriers. At present,while foreign direct investment up to 49 per cent is allowed,foreign airlines are barred from holding equity in Indian carriers. The move,earlier stalled by Ajit Singhs predecessor Vayalar Ravi,will help some of the cash-starved Indian airlines such as Kingfisher raise capital. It will also do well to re-affirm the Manmohan Singh governments liberalisation credentials. With the aviation ministry on board,it is now up to the commerce and industry ministry to quickly finalise a cabinet note and rally other administrative ministries. Hopefully,Ajit Singh will not stop at this as he tries to change mindsets and break lobbies. What requires urgent attention is the need to be more liberal with rights to domestic carriers to fly to other countries. For long,domestic carriers have been given a non-level playing field under the pretext of guarding loss-making Air Indias interests. At present,the national carrier retains the first right of refusal for grant of foreign flying rights to private players. In fact,some international routes and capacity are expressly reserved for Air India. Despite substantial flying quotas lying unutilised in almost all sectors,including the lucrative Middle East,the ministry has refused private players permission to fly to such destinations. In 2011,it withheld approval for nearly 50,000 overseas seats to Indian players,including Jet and Indigo,40 per cent of which belonged to countries in the Middle East. Nearly 44 per cent flying quota for Dubai remains unutilised and 95 per cent for the European sector. No Indian carrier flies to Spain,Denmark,Sweden or Switzerland. So,while foreign carriers utilise their full flying quota to India,domestic carriers helplessly wait. Instead of protecting Air Indias interests in such a perverse way,Ajit Singh should attempt to change notions of national pride by strategising its revival through disinvestment or induction of strategic investor.
