human development

After allowing foreign airlines to invest up to 49% in domestic carriers, the government is now considering a plan to relax the minimum requirements for Indian carriers to fly overseas.
 
Till now, the domestic airlines were required to have 20 aircraft and five years of flying experience in the domestic regions. Civil Aviation Minister Ajit Singh told reporters in New Delhi on Friday that a plan is being considered to relax these norms.

According to analysts, none of the existing airlines will really benefit even if the norms are eased as most of the airlines have already completed five years in the domestic market. However, new players are set to benefit.

GoAir, which currently does not have 20 aircraft has applied for a waiver to be authorised to operate flights internationally.

 “We have applied for a waiver and we are studying the opportunity in the overseas market,” said Giorgio De Roni, chief executive officer, GoAir. He, however, refused to comment on the potential benefits if the overseas flying norms are relaxed.

According to analysts, the new players who are set to enter the scheduled operations for flying regional routes will benefit out of the decision. Religare Group’s scheduled regional airline Air Mantra, Deccan Charter, Freedom Aviation, Kareena Airlines could be some of the beneficiaries.

“It is a positive move for the industry if the minimum requirements are relaxed. International routes are a lucrative option for the domestic players,” said an analyst from domestic brokerage who did not wish to be quoted.

Last week, the government approved foreign airlines to invest up to 49% in domestic carriers. However, not too many foreign players have shown interest in investing in domestic players owing to high fuel cost and airport charges.

Air Asia on Friday clarified that it has no immediate plans of investing in India carriers as speculated by the media. Reuters quoted CEO, Tony Fernandes saying, “We have no immediate plans to enter the market because the aviation fuel tax and airport charges are still too high.”

A notification was also issued for 49% FDI in the aviation sector. The proposal of foreign airlines will have to be cleared by the Foreign Investment Promotion Board (FIPB) before the investment can go through. The 49% limit will subsume FDI and FII (foreign institutional investor) investment.