The Hindu Business Line : Allow foreign airlines to pick up stake in domestic carriers: Mallya

New Delhi/Bangalore, Nov. 17 The Chairman of Kingfisher Airlines, Mr Vijay Mallya has “requested” the Government to allow foreign airlines to pick up a minority stake in domestic airlines.

“I have requested the Government to allow foreign airlines to acquire a stake of up to 25 per cent in Indian airlines. I believe aviation should be treated at par with international norms and other industry sectors where strategic investors can invest. This will be a wealth creator and secure the future of Indian aviation,” Mr Mallya said.

Senior Government officials indicated that such a communication is unlikely to carry much weight. “Government policy is not decided on the basis of what one individual wants. If such a request is made from all stakeholders of the domestic airline industry and is backed by proper facts and figures to buttress the case, it is a different issue,” sources said.

At the moment, Government policy does not allow foreign airlines to pick up a stake either directly or indirectly in domestic airlines. This was not the case earlier and foreign airlines were allowed to pick up a stake in domestic airlines. In fact, Jet Airways had equity participation from some foreign airlines including Kuwait Airways and Gulf Air before the Government policy disallowed it.

The Minister for Civil Aviation, Mr Praful Patel, in fact has gone on record saying that given the state of some international airlines, airlines from India can look at acquiring a stake in them.

A partner from the consulting firm, Ernst &Young, Mr Kapil Arora, told Business Line that the situation in the airline industry was grim. “The situation is very serious. Last year the losses were $1 billion. This fiscal for all the domestic airlines put together, it is estimated to be close to $2 billion,” he said.

He was of the opinion that both Kingfisher Airlines and Jet Airways would require over Rs 2,000 crore over the next 9-12 months to continue their operations.