The Government’s proposed move to liberalise foreign direct investment (FDI) rules in domestic aviation sector is likely to get a lukewarm response from international airlines.

A proposal to allow foreign airlines to acquire a 49 per cent stake in domestic airlines is likely to be taken up at a Cabinet meeting scheduled for Friday. While German carrier Lufthansa was categorical in saying it had “no plans” to invest in an Indian carrier, a spokesman for Singapore Airlines declined comment, saying it was the airline’s policy not to talk about “hypothetical” situations.

In a statement, the Dubai-based Emirates Airlines said, “India is one of world’s most important aviation markets. While the airline’s philosophy is to focus on organic growth, we always welcome any reform that liberalises markets, including FDI rules.”

In a statement, the International Airlines Group said, at this stage they had no plan to invest in any Indian airline. It added that India being a key market, the Group would monitor the changing regulatory environment. IAG is the parent company of British Airways, Spanish carrier, Iberia and bmi.

‘Keen to invest’

Interestingly, earlier this year, Spicejet and Kingfisher Airlines had confirmed that foreign investors were keen to invest in them.

Neil Mills, Chief Executive Officer, Spicejet, told Business Line recently that airlines from the Gulf and South-East Asia had shown “speculative interest” in acquiring a stake in the carrier.

In March this year, the promoter of Kingfisher, Vijay Mallya, told newspersons that at least one international airline was interested in investing in the cash-strapped airline. Both Mills and Mallya declined to name the airlines that had evinced interest.

(This article was published on September 13, 2012)
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