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The Government is to shortly decide on allowing foreign airlines to pick up stakes in domestic airlines. Sources said that a final decision on the issue was expected within a “couple of weeks”.
While foreign investors are allowed to hold up to 49 per cent stake in domestic carriers, foreign airlines are not allowed to hold stakes in domestic airlines.
The investment rules were tweaked some years ago, around the time the Tatas had attempted to enter the domestic aviation space in partnership with Singapore Airlines. Security concerns were then cited as the reason for the ban.
Sources said this time around, too, the Civil Aviation Ministry has struck a different stance, proposing a 24 per cent cap on the stake held by foreign airlines, against the 26 per cent recommended by the Industry Ministry.
A 26-per-cent cap would allow a foreign investor to have voting rights on the board of an Indian carrier, which would not be possible if the holding was capped at 24 per cent.
“The Civil Aviation Ministry has proposed 24 per cent investment by foreign airlines. The Cabinet is likely to take a call on the issue in a couple of weeks,” a person familiar with the development said.
Asked about the Department of Industrial Policy and Promotion (DIPP) proposing a 26-per-cent cap, the source said, “Whatever decision the Government takes, everyone will have to accept”.
HIGH FARE WARNING
Meanwhile, the civil aviation regulator Directorate General of Civil Aviation (DGCA) has warned airlines not to raise air ticket prices beyond a given range.
“There are price bands. Probably, the airlines are operating on the highest bands,” said the DGCA Chief, Mr E.K. Bharat Bhushan.
Admitting that there could have been “some upward movement due to large-scale cancellations by a big airline”, Mr Bhushan said, “We are closely monitoring the fares. We keep nudging them (airlines) if they go beyond the price band.”
Expressing the hope that fares would “level off soon”, he said the airlines should have “transparency” in fixing airfares and follow the rules made by the DGCA in this regard.
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