The Telegraph
Since 1st March, 1999
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Foreign flight hope rises for new airlines

New Delhi, Sept. 2: The civil aviation ministry feels airlines that want to fly abroad should not find their ambitions thwarted by current regulations that insist on five years’ experience.

The ministry wants to clear such proposals on the basis of an airline’s technical and financial strengths.

The ministry will ask the group of ministers (GoM) on civil aviation to give it the power to do so at the next meeting later this month.

Airlines are allowed to fly overseas if they have an experience of five years, a minimum of 20 aircraft and a paid-up capital of Rs 100 crore.

Several inter-ministerial meetings in the recent past have discussed the possibility of relaxing the criterion to three years. This would have made Air Deccan eligible to fly abroad, but not Kingfisher Airlines which has a controlling stake in it.

“We do not want any experience-based criteria because domestic airlines will have to wait before bidding for foreign routes while start-up airlines from abroad will be eligible to fly into India,” officials said.

The new rule will benefit Vijay Mallya’s Kingfisher Airlines, which has been asking for rights to fly abroad. Naresh Goyal-led Jet Airways has, however, been lobbying to retain the rule.

All applications will be cleared on a case-by-case basis. Although there may be technical and financial criteria, the decision to let an airline fly abroad will depend on the availability of routes, civil aviation officials said.

Officials said the GoM was supposed to take a call on the issue on Monday but the meeting has been postponed and may be held on September 20.

The GoM will also discuss a proposal to allow foreign airlines to pick up a minority stake in domestic passenger airlines.

The finance ministry and the Planning Commission are in favour of the proposal as they feel there is no logic in barring foreign airlines from acquiring a stake when other foreign investors are allowed to hold a 49 per cent stake in a domestic airline.

They feel that if British Airways and Lufthansa are allowed to acquire a stake in a local airline, they will bring new aviation technologies and improve the performance of domestic carriers.

Officials said North Block would want to allow foreign airlines to pick up a 26 per cent stake within the 49 per cent FDI cap in domestic carriers. However, the civil aviation ministry is against such a step as this would allow foreign carriers to use domestic airlines as feeders for their international operations, which will harm the prospects of state-run Air India.

Large privately run airlines in India are also lobbying against the proposal. However, smaller airlines such as SpiceJet favour the move as it could help them raise much-needed cash for expansion. However, officials said the home ministry, which is not against FDI in any form in domestic airlines, insisted that foreign players should be granted entry only after prior vetting by security agencies.

It also wants intelligence agencies to examine all FDI proposals in aeronautics, aviation design, and repair and maintenance hubs. “There is a global alert on terror groups using aviation facilities or spares. That explains the ultra-conservatism on the part of the home ministry,” officials said.

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