PIO investments within FDI ambit

Civil Aviation Minister Praful Patel said in Parliament today the civil aviation policy, in its current form, permitted only an Indian citizen to start an airline in the country.

Therefore, investments by PIOs in domestic carrier will be taken as foreign direct investment, and will remain within the 49 per cent ceiling.

The civil aviation ministry is putting together a proposal for Cabinet's consideration regarding the status of PIOs.

Under the rules, a permit could also be provided to a company or a body whose effective control was vested with Indian nationals, Patel said. He added, "PIOs, who are not Indian citizens, cannot be permitted to operate air transport services as per the present regulations."

Patel also said the Airports Authority of India (AAI) had given permission to Indian Airlines, which is the handling agent for Kingfisher airlines, to operate from terminal I-A, which is exclusively meant for Indian Airlines at the Indira Gandhi Airport.

He pointing out that at present the government was not in favor of foreign airlines picking up stakes in domestic carriers. There was, however, a case for reviewing this policy "as operation of airlines requires expertise as much as capital," he said in reply to a question in the Lok Sabha.

Patel said the draft civil aviation policy, which among other things proposes to cover the policy on air traffic management, was to be finalised through inter-ministerial consultations.

Regarding shortage of air traffic controllers, the minister said 229 posts had been created last year, and steps to fill up 106 ATC posts were in progress.

Patel said passenger loads in the recent past had gone up by 25 per cent along with cargo traffic. The estimated cargo traffic of Indian airlines in 2005-06 would grow by 15 per cent from six per cent in 2003-04, he added.