Air Pocket Ahead For Jet

While the new policy change clearly states that foreign equity ceiling is to be raised from 40 per cent to 49 per cent, and furthermore, that the investment cannot be brought in by a foreign airline or airports authority, it could well have left a loophole for potential foreign players.

The policy is set to allow foreign investment from all other avenues.

Therefore, what is to prevent foreign airlines utilising a subsidiary as a front company for investment. The open skies policy had seen a spate of private ATOs jumping into the ring, bidding for a piece of the pie in the sky.

 

However, a couple of years down the line, increasing overheads, wafer-thin margins, high monthly cash outgos due to operational leases for aircraft, dipping load factors and expensive inflight frills, have all but crippled the domestic aviation industry.

Next, domestic operators have compulsorily had to operate on non-profitable feeder routes.

The governments open bias towards the national carriers, Air India and Indian Airlines, is also a well-known fact.

Lastly, competition has also left the ATOs at the mercy of the market leader, Indian Airlines, for fixing prices. But the knock-out punch could well be the one delivered by the civil aviation minister on Sunday.

Analysts say that in many ways, the Indian scene today reflects the state of the aviation industry the world over.

In America, airlines seem to go under with monotonous regularity. The plight of a number of European operators, including some of the smaller national carriers, is similar.

In Asia too, bound by trade restrictions and national turf battles, aviators are going bankrupt at an alarming rate.

While all the ATOs wait with bated breath for November and the new aviation policy to be announced, the one fact which surfaces is that an industry shakeout now appears to be almost a certainty.