The civil aviation companies are not enthused over the N K Singh committee's recommendation for increasing foreign direct investment (FDI) in the civil aviation sector to 49 per cent from 40 per cent and allowing foreign airlines to invest within the cap.
There were more pressing concerns before the industry. The FDI issue was not relevant at this stage, an aviation company told Business Standard.
"Air Sahara is 100 per cent Indian and will remain so. Entry of foreign airlines will be detrimental to the domestic sector," U K Bose, chief executive officer of Air Sahara, told Business Standard.
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Saroj K Dutta, executive director of Jet Airways, refused to comment.
The panel has also suggested 100 per cent foreign equity in airports through the automatic route. But some sections feel when implemented these recommendations will help set the limping industry on the right track.
"The ministry has to take a view on the proposal on FDI in airlines. On FDI in airports, the ministry in principle is not at variance with the recommendations. But it is unlikely that any foreign player will come in by itself," civil aviation ministry officials said.
Industry sources said nowhere in the world foreign investment was allowed into the domestic sector. Such a move would lead to cannibalisation of the market of domestic carriers. "A foreign airline will exploit the domestic hub and network to generate traffic on its international point-to-point routes." said an industry expert.
Entry of foreign airlines would improve the quality and competitiveness of domestic civil aviation, the panel said.
However, some airlines have welcomed the recommendations. "This sector has been ignored for a long time. We welcome this proposal and hope this will be a step in the right direction for the domestic aviation industry," a Royal Airways spokesperson said.
Aviation analysts feel the government should come out with a clear aviation policy. "Also the aircraft turbine fuel (ATF) charges, and landing and parking charges will have to be lowered since these bleed domestic airlines," an analyst said.