SUITORS IN THE AIR
Local promoters may take their time to sell stakes
NEW DELHI: After Jet-Etihad, who? There is a long list of airlines who are potential suitors for Indian carriers after the government opened up the aviation sector to foreign direct investment (FDI), but the path may not be easy.
Some Indian airlines have significant portfolio stakes from overseas investors. These give local promoters a majority that gives them control that they may be in no mood to cede to an overseas airline.
India is the ninth largest aviation market handling 121 million domestic and 41 million international passengers, and is likely to become the 3rd largest by 2020 handling 336 million domestic and 85 million international passengers.
Add to this the fact that the government is willing to rework bilateral treaties to allow more seat access for foreign countries, and India becomes an attractive investment destination.
Potential suitors include Qatar Airways, Air Arabia, All Nippon Airways, Singapore Airlines and Lufthansa.
"Middle East carriers have game changing expansion plans and would need continuous access to markets. India's international traffic growth, possibly for next 2-3 decades, is strategically crucial to the future plans for top three Middle East carriers," said Kapil Kaul, South Asia CEO of industry consulting firm Centre for Asia Pacific Aviation.
Budget airlines SpiceJet and Go Air could be next in line to get foreign investors on board. Grounded Kingfisher Airlines is no more an attractive investment.