Civil Aviation Minister Praful Patel today said the government was considering foreign direct investment (FDI) of up to 25 per cent in Indian carriers by foreign airlines.
This means that the foreign carrier will not have the right to block special resolutions in the board, for which an investor requires a 26 per cent shareholding.
“Every airline has a problem and we have to look for extraordinary solutions. It is not formalised yet. It is only a thought process. We are not saying we will give it. We just feel the need,” said Patel.
Airlines, led by full-service carrier Kingfisher, have been lobbying for the government to allow foreign carriers to take stakes in domestic carriers. The Indian airline industry is estimated to lose close to Rs 10,000 crore this fiscal.
Foreign carriers like British Airways, Lufthansa, Emirates, Singapore Airlines and Virgin Atlantic are understood to have shown interest in Indian carriers in the recent past.
“The ability for foreign airlines to invest may provide a much-needed lifeline for an industry that desperately needs cash,” said Kapil Kaul, CEO (Indian sub-continent) of global aviation consultancy firm, Centre for Asia Pacific Aviation (CAPA).
Speaking of the equity and soft loan package to national carrier Air India, Patel said the proposal would be pushed in the cabinet in February.
Patel added that the ministry could allow Delhi and Mumbai to levy airport development fees on passengers for two years to bridge the gap in capital as a result of the poor response to their real estate projects and fall in passenger numbers.
