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| Politics
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| Prime Minister meets airline chiefs |
| Prime Minister meets airline chiefs, Mallya absent
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| INDIA
, 26-November-2011
1:40:44 AM |
| Close on the heels of the financial turbulence at Kingfisher Airlines, Prime Minister Manmohan Singh today met with heads of major domestic airlines to discuss the financial health of the aviation sector.
The meeting that lasted for nearly an hour saw Jet Airways chairman Naresh Goyal, Indigo promoter Rahul Bhatia, Spice Jet CEO Neil Mill and Go Air owner Jeh Wadia in attendance. Interestingly, Kingfisher boss Vijay Mallya was conspicuous by his absence.
The meeting comes at a time when the cash-strapped Kingfisher Airlines is still looking for a way out of the financial mess. Significantly, most other private carriers like Jet Airways and SpiceJet have all reported losses due to high costs of operation and rising crude prices.
While the agenda of the meeting was not known, a discussion on the proposal to allow Foreign Direct Investment (FDI) by foreign airlines in Indian carriers was reportedly discussed.
Current rules allow 49 per cent FDI in Indian aviation companies, but do not allow foreign airlines to own stake in domestic carriers. Banks are finding it hard to extend more loans to the airlines - hence, foreign investment could provide the much-needed assistance.
Some airlines, though, are opposed to FDI because they worry that foreign partners will eventually take over the airlines they invest in. However, Kingfisher Airlines has been urging the government to allow foreign airlines to invest in domestic carriers.
High crude prices were also reportedly discussed. Jet fuel prices have increased by 30 per cent since December 2010, and domestic airlines are expected to lose Rs. 3,500 crore in the first six months of this fiscal.
The Prime Minister had earlier said that "if domestic carriers get into difficulties, we have to find ways and means to help them get out of the process", thus sparking rumours of the government offering the debt-laden Kingfisher Airlines a bailout package. (Watch)
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