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16 March 2013

We welcome investment by foreign airlines in Indian carriers: Chaudhary Ajit Singh, Aviation Minister

We welcome investment by foreign airlines in Indian carriers: Chaudhary Ajit Singh, Aviation Minister

In a chat with ET Now, Ajit Singh, Aviation Minister, shares his views on FDI in aviation and AirAsia-Tata JV. Excerpts:

Problems with AirAsia joint venture may concern many theories. Why do not you clear the air for once and for all?

Basically our policy framework is very clear. We welcome investment by foreign airlines in Indian carriers. Second thing is that there are regulatory requirements. So, any investment has to be within the policy framework and it has to meet regulatory requirements. There were some procedural problems because notification issued said that investment should be in Indian carriers. But that notification was also issued by the Commerce Ministry and not by the Aviation Ministry. If their interpretation is that JV can happen before or after, in practice if you look at it, it is the same thing. They could have got the licence, then formed the JV and gone to FIPB. Instead, they formed the JV and went to FIPB. So as far as Aviation Ministry is concerned, there is no change.

Was there any error in notifying FDI in the aviation policy and will it be changed?

That you will have to ask them. I would not call it an error. It could be their interpretation, carelessness or not foreseeing how things will happen.

So, will there be a notification to change it? Have you heard from the Commerce Minister?

Frankly I do not know what exactly was discussed but I would expect that, yes.

But the confusion was in the FDI policy. Does it apply to existing companies or is this only applicable for new JVs?

See, the problem was, in fact all TV people and newspapers said that in new airlines policy, allowing (foreign airlines) to invest here was meant for Kingfisher. Didn't all of you say that? I said again and again, no, it is an enabling policy which we need. We need foreign airlines' technical expertise, their management expertise; their reach in this aviation sector is worldwide. So, that is what it is. Now JVs formed before or after is not really the issue. It could be a procedural issue, nothing more than that.

By how soon should we expect approvals to flow in for AirAsia?

It is very difficult for me to say that because I do not know what data they are supposed to give, what application they are to fill out, whether they will give all that required information upfront or will it take time. I cannot really tell you how long will it take. It depends on regulatory requirements.

AirAsia also marks the comeback of the Tatas in the aviation sector. How happy are you to see that?

As you yourself said it, Ratan Tata and his father's name is associated with Air India and the Maharaja brand which was liked all over the world, and we were the No. 1 airline. So that nostalgia is there about that name and he tried it even later. He is also passionately interested in airline business. He tried with Singapore once. Therefore, it is good that the name is again associated with the aviation sector.

Let me ask you a hypothetical question. Will you be happy to see Ratan Tata as the chairman of AirAsia?

It is not for me to be happy or unhappy or even consider that. That is between them and the company they are forming.

AirAsia-Tata JV has got all the necessary clearances. On the flipside, you have got the Jet-Etihad deal. Are you a bit concerned about the delay?

I would not say I am concerned. It is a little delayed for reasons that have nothing to do with aviation sector. Therefore, I am hopeful.

What are those reasons?

I am not going to clarify on that. If it was regarding the aviation sector, I would have clarified.

Etihad has raised concerns about the treatment Etisalat received, eventually it had to fold up. Is that a concern and how are you planning to allay all those concerns?

When they came and met me and other ministers also, no such concerns were raised. Again I will say that there are no concerns with aviation sector as such. Rest you will have to speak to other guys.

How soon then do you expect the Jet-Etihad deal to happen?

Four to six weeks.

KFA's flying slots have been cancelled. By when will you allocate them to other airlines?

For domestic travel, they are allocated by DGCA and they have already received some applications. They have already allocated some. For the international sector, the ministry assigns them and we will ask all airlines. I have read in the papers that Jet has applied for some. So, let us wait and see which airlines want that and from where to where. Then we will decide.

Vijay Mallya has said that at North Block, KFA and Aviation Minister are discussing revival plans. Is it true or is he daydreaming?

Daydreaming does not apply to this case.

Any concrete plans from KFA for revival of operations then?

We have not seen or heard about any credible plan for revival.

So, do you believe that FDI in aviation policy is very stringent, getting most top management vetted by Home Ministry, board constitution, etc.?

Those are not part of FDI norms. They were there before and any foreigner coming into the sector, the Home Ministry has to check that anyway. But those norms about two third (board members) to be Indians and effective control, they were there before FDI was considered.

Fares have gone down recently without the intervention of the regulator or the ministry. Your reaction to that?

No, we do not regulate airfares. It has happened because this is the lean season and in spite of Kingfisher going out of business, their load factor was 70% to 75%. So, that was a business decision only.

Do you not believe there are times when fares have to be looked into by the government?

We are very much concerned about many things. The way fares are decided, the way the bucket system works. As far as predatory pricing or anti-competitive pricing is concerned, there is Competition Commission of India, which can look at it and which has looked at it earlier.

First FDI proposal has checked in, second will soon take off. Which are the other foreign airlines that are interested to check into Indian skies?

I guess after these two FDIs, probably every airline would wait for some increase in the passenger traffic, some improvement in the economic conditions world over so that this sector can keep growing.

So you would not want to name any airlines that have approached you?

Nobody approaches me. They approach the airlines where they want to invest. I know some airlines have talked to some other airlines but I do not think they are at that stage, at this point in time. I do not think I can say that anything is likely to happen soon.

Source : The Economic Times

Link : http://articles.economictimes.indiatimes.com/2013-03-07/news/37532017_1_airlines-in-indian-carriers-foreign-airlines-aviation-sector

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