The Telegraph
Since 1st March, 1999
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Luck eludes foreign airlines

New Delhi, April 21: Civil aviation minister Praful Patel today said the government would continue to bar foreign airlines from picking up stakes in domestic carriers. “As of now, foreign airlines cannot pick up a stake in domestic airlines,” Patel said.

The minister said the government would soon take a call on merging state-run carriers Air-India and Indian Airlines. The government would also decide on whether the two airlines would have separate IPOs or whether there would be one offer after the proposed merger, the minister added.

He said the government was yet to decide on the mode of upgrading Calcutta and Chennai airports. Old rules, which restrict the coming up of second airports within a radius of 150 km, would also be reviewed.

Sections within the government, including the finance ministry, want foreign airlines to pick up a stake in domestic carriers. However, the civil aviation ministry thinks otherwise. In its draft aviation policy, the ministry says the current policy of allowing up to 49 per cent FDI in airlines should continue.

Patel, however, said, “But government policies evolve with the changing scenario and this could happen when the government feels the necessity. At this stage, the present policy is sufficient to take care of the needs of Indian airlines.”

Aviation ministry sources said the market needed to become more mature before the government allows the entry of a strong airline brand. “At least five years should go by and the number of aircraft plying in domestic skies should go up to 1,000 before we can open up the way some would like us to,”sources said.

Patel said the ministry was exploring several options on the IPO of Indian Airlines and Air-India. “Our advisers are working on various options. One suggestion is that maybe a better value can be arrived at (on the IPO) after the merger.”

The minister also doused criticisms on A-I’s ageing fleet, saying it was 100 per cent safe. The carrier is on the receiving end of some passenger bluster due to huge delays caused by technical snags.

Patel said the ministry was discussing with states the scope of a “national aviation grid” by renovating about 400 unused airfields.

“Most of these airfields are not functional. We will talk to state governments and encourage them to upgrade these small and non-functional airports and airfields. State governments should take an interest in developing them to create a national grid for aviation,” he said.

He said states should either privatise these airports or take the private-public partnership route for their renewal.

Patel said the government could relax rules barring an airport within 150 km of an existing one, to enable big cities have a second such facility.

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