New Delhi opens door for foreign investment in Air India

Remigio Civitarese
Gennaio 13, 2018

As the Indian government allowed foreign airlines to invest up to 49 per cent in Air India, Singapore Airlines said that it will keep options open on disinvestment of the national carrier.

"It has now been chose to do away with this restriction and allow foreign airlines to invest up to 49 per cent under approval route in Air India.", the release said. At the same time, other Indian carriers like IndiGo or Jet Airways can tie up with a foreign carrier for investment in Air India. However, the same provision was not applicable to Air India.

The move is expected to clear the way for Singapore Airlines and Tata Group-backed Vistara to bid for Air India.

India's decision to relax FDI norms in various sectors would make it a much more attractive destination for overseas investors, US-India Strategic Partnership Forum (USISPF) said today. "Our priority is further expansion of Vistara".

"Air India has been facing losses for the past many years on account of a multitude of factors like high fuel prices, high-interest burden, increasing competition especially from low-priced carriers, high debt-equity ratio, and high airport charges", Jayant Sinha, India's Minister of State for Civil Aviation said last week. "However, we will keep our options open with respect to the proposed disinvestment of Air India", Singapore Airlines said in an e-mailed statement to PTI.

Singapore Airlines owns 49 per cent stake in full service carrier Vistara, while the remaining shareholding is with the Tatas.

Gopinath said that the management of Air India should be allowed to retain employees it wants and let go the rest with a golden handshake from the government.

In his official Twitter handle, Minister of Civil Aviation, Ashok Gajapathi Raju eloquently confirmed the cabinet's decision to introduce a new foreign direct investment (FDI) policy for Air India.

Foreign airlines will be able to buy up to 49% p of Air India under new rules approved by the government on Wednesday to boost the debt-laden flag carrier.

Air India ran losses for almost a decade after a botched merger in 2007 and has debts of around USD7.67 billion according to government figures.

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