New policy to disallow foreign airlines to pick stake

The new aviation policy, to be announced soon, is likely to continue with the existing practice of not allowing equity participation by foreign airlines in domestic operations.

Such a move would act as a major deterrent to private sector participation, sources said adding it would hamper inflow of money as well as technical and operational expertise needed for any kind of investment in civil aviation sector.

"In case the new policy does not allow equity participation by foreign airlines, the sector will not be able to reap the maximum benefits arising from allowing 49% FDI in the sector," the sources said.

However, officials in the civil aviation ministry said the issue is not closed and would be taken up for consideration.

The planning commission in its mid-term appraisal and the Naresh Chandra Committee report had, however, favoured allowing equity participation by foreign airlines in domestic air transport operations.

The policy, which would go to the cabinet in a month's time, would announce restructuring of Airports Authority of India, including appointment of more professional and independent directors to give it a corporate face.

The policy is also likely to talk about making bilaterals more liberal and relaxing the norms regarding the number of flights and cities.

The draft policy, now in circulation, has also relaxed the entry norms for companies for scheduled airports regarding the minimum number of aircraft the entrant should own initially.

This is one of the provisions that the Naresh Chandra Committee suggested should be done away with.

The policy would also recommend setting up of regulators to monitor and review functioning of airports and stick to the FDI limit of 49%.