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Thursday, Oct 17, 2019

Indian airlines continue to oppose 100% FDI. Fear of Qatar Airways’ India plans?

The Federation of Indian Airlines (FIA) has cited security hassles in its latest letter to the aviation ministry, to dissuade the government against fully-foreign owned airlines to enter India.

business Updated: Jun 08, 2017 10:36 IST
Suchetana Ray
Suchetana Ray
Hindustan Times, New Delhi
Domestic flights prepare to take off from the IGI Airport in Delhi.
Domestic flights prepare to take off from the IGI Airport in Delhi.(HT Archive)

Almost a year after the Indian government allowed 100% foreign investment into its aviation sector, local airlines continue to oppose the policy. The Federation of Indian Airlines (FIA) has cited security hassles in its latest letter to the government, to warn against fully-foreign owned airlines entering India.

FIA has IndiGo, SpiceJet, Jet Airways and GoAir as its members, with 75% share of domestic air travel.

The federation that India might not have clarity on where control lies in case a fully-foreign owned airline sets up shop here and that airline would have access to the country’s defence airfields.

“It is also pertinent to note that countries, whose diplomatic relations with India are strained, may also use this window (of opportunity) to gain access to India,” said the letter accessed by HT. This letter was sent to several ministries of the Indian government, earlier this month.

The letter has highlighted foreign investment limits set by other countries to show that most countries ensure effective control is with their nationals. FDI limit even in the world’s largest aviation market, US, is limited to 25%. Though the European Union allows 49% FDI, effective control of the airline is mandated to be with European nationals.

“...this decision will result in permanent damage to the domestic aviation industry and to India’s aim of building global international hub airports and global airlines in India. This decision has the potential to create permanent foreign monopolies on key routes,” reads the letter.

The letter further argues that introducing financially stronger 100% foreign owned airlines, in some cases, state-owned, will create a –non- level playing field for domestic airlines. In a highly competitive Indian market, this would lead to mounting losses for domestic airlines.

Experts point out how this move by FIA is perhaps propelled by fear of competition from Qatar Airways, as it plans a fully-owned airline in India.

In June last year, the government decided to allow 100% investment by foreign entities, and not airline companies, into the aviation sector to own and operate air carriers. The investment of foreign airlines into Indian companies remained limited to 49%.

Within a year of the opening up of Indian skies, Qatar Airways in March, had expressed interest setting up an airline with a planned tie-up with Qatar Investment Authority.

First Published: May 25, 2017 14:41 IST

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