Government May Amend Rules On 100% Ownership By Foreign Airlines

Government has not yet received any application from any foreign airline for 100% FDI, Sinha said.

Attendees walk past a Dassault Aviation SA Falcon 20000LXS aircraft. (Photographer: Dhiraj Singh/Bloomberg)
Attendees walk past a Dassault Aviation SA Falcon 20000LXS aircraft. (Photographer: Dhiraj Singh/Bloomberg)

The government is considering changes in rules regarding 100 percent ownership of Indian airlines by foreign carriers, Union Aviation Minister Jayant Sinha said Wednesday, a week after Qatar Airways unveiled plans to launch a domestic airline in India.

“The government welcomes 100 percent foreign direct investment (FDI) in civil aviation and is working through the exact registration process and policies around that,” Sinha said at an event organised by SpiceJet Ltd.

The minister said the government has as of now not received any application from any foreign airline for 100 percent FDI.

Bloomberg reported last week that Qatar Airways plans to establish a short-haul airline with 100 planes in India.

The Gulf carrier will make an application to the Indian authorities “soon,” the report quoted Chief Executive Officer Akbar Al Baker as saying at the ITB Berlin travel fair, adding that he intends to proceed “step by step”.

Current regulations in India allow a foreign carrier to hold up to 49 percent stake in an Indian airline, while foreign sovereign wealth funds and portfolio investors can potentially acquire up to 100 percent.

Qatar Investment Authority, the sovereign wealth fund that backs Qatar Air, would be the most suitable vehicle for establishing an airline in India, the CEO was quoted as saying in a media briefing. The fund could use his carrier to run the venture, he said.

SpiceJet Chairman and Managing Director Ajay Singh, however, raised objections to India allowing 100 FDI in the aviation sector by foreign airlines, saying that it must be based on a policy of reciprocity, that is, the same favours must be granted to Indian carriers by other nations.

“There is no country in the world today that allows 100 percent FDI in aviation...not the most developed countries (either). If you look at the Americans or the Europeans, or the Australians, no country allows 100 percent FDI,” he told BloombergQuint on the sidelines of the event.

Singh and Jet Airways Ltd. acting Chief Executive Officer Amit Agarwal had met civil aviation ministry officials to flag concerns regarding the issue, on behalf of the Federation of Indian Airlines (FIA), a grouping of domestic carriers, wire agency PTI reported on March 10.

Singh on Wednesday also spoke about the space crunch at airports. “Airlines in India today have ordered hundreds of planes, and there is a severe paucity of airport capacity, and airspace capacity as well. So, we think adding more planes to that will create bigger problems for India,” he said.