Ibrahim Statement Stuns Airlines

Foreign equity holding is the key element of the new aviation policy the civil aviation ministry is working on. The policy package is yet to be referred to the cabinet.

Still, Ibrahim chose to make a policy announcement on this issue in Mumbai on Sunday. He reportedly told mediapersons that foreign equity holding will be barred in domestic airlines with retrospective effect. As a result, the minister reportedly said, Jet Airways will be required to terminate its equity tieup with Gulf Air and Kuwait Airways. Gulf Air and Kuwait Airways hold 20 per cent each in Jet Airways.

The statement is significant also because Tata Industries and Singapore Airlines have jointly applied to the Foreign Investment Promotion Board (FIPB) for allowing the foreign airline to take up a 40 per cent stake in a joint venture with the Tatas.

 

The civil aviation ministry has asked the FIPB not to take up the matter until the government finalises the new aviation policy.

Copies of the policy framework with alternative suggestions, especially on controversial points, have been circulated for inter-ministerial comments and the final package, sources say, can be worked out only after the comments have been received.

The civil aviation ministry is not the final authority in this regard, more so because the United Front is a 13-party coalition and differences of opinion on controversial issues such as this are not unlikely.

The minister has said that the policy is expected to be finalised by November-end.

Barring foreign equity participation in domestic airlines and asking Jet Airways to terminate its alliance with Gulf Air and Kuwait Airways may send a wrong signal overseas.