Jet Airways, the report said, would not gain as it is already in violation of foreign direct investment (FDI) norms. The promoter (with 80% stake) is classified as an overseas corporate body.
"Kingfisher Airlines (because of large liabilities) and IndiGo (foreign ownership already 48%) also won't gain."
The government, it said, needs to introduce further reforms to rationalize taxes on fuel which make aviation turbine fuel (ATF) 40% more expensive in India.
"State sales tax on ATF (25% on an average) is the largest component and needs to be rationalized. Either individual states need to be convinced to reduce taxes or ATF could be moved to 'declared goods' category to attract uniform 4% sales tax across India."
"Even as the move is incrementally positive, we believe it is unlikely to solve problems of debt-laden carriers and banks which have lent to these companies."