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Aviation History
1997
1997 - 0516.PDF
AIR TRANSPORT Jet Airways: one of the few remaining private airlines still operating in India, with the help of Kuwait Airlways and Gulf Air Mystery in the East DEEPAK MEHTA/LONDON FAR FROM ENCOURAGING foreign airlines to invest in India's burgeoning civil-aviation industry, the much-heralded new aviation policy recently announced by India's United Front Government has confused and bewildered overseas investors. India's powerful Cabinet Committee On Foreign Investment (CCFI) has announced that foreign airlines will no longer be permitted to take an equity stake in joint ventures with Indian aviation companies, reversing an earlier policy which allowed carriers such as Gulf Air, Kuwait Airways and Lufthansa to hold a maxi mum 40% equity stake in dieir joint ventures witJi Indian partners. The policy stipulates that, in future, only "non-aviation" companies will be allowed to enter the industry and acquire a 40% stake. The announcement, made by India's civil- aviation minister, C M Ibrahim, leaves foreign airline companies confused. No precise defini tion has been given of what constitutes an "avi ation" or a "non-aviation" company. Jet Airways, for example, one of the few remaining private airlines still operating in India, is 40% owned by Kuwait Airways and Gulf Air. Both are "aviation" companies, yet tiie 20% of Jet Airways they each own is registered in the name India's new aviation policy sends confusing signals to foreign investors. of an off-shore "non-aviation" holding com pany, Tailwinds, registered in die Isle of Man in die UK. So far, Jet Airways has not been told to dispose of its foreign equity, aldiough Ibrahim has reportedly threatened die airline widi the forceful removal of Gulf Air and Kuwait Airways if it does not do shed diem voluntarily. Such a move, say Indian aviation experts, will inevitably lead to the collapse of India's most profitable private domestic airline. MIXED SIGNALS "If this is die new aviation policy diat everyone has been waiting for, then it's a great disap pointment, and potentially disastrous for the industry," says RavinderNadi, managing direc tor of Rajinder Narain, a Delhi-based law firm dealing in aviation matters. "All it has done is send mixed signals out to die industry. It has given us no clear direction on die future of aviation policy in India," says Nadi. Rashid Jung, of Northern Aviation, a Delhi- based aviation consultancy, accuses the Government of moving too fast. "What is need ed is a long-term policy which is prepared over a long period of time," he says. The proposed new aviation policy is an astounding turnaround in Indian Government thinking. The former Congress Administration prided itself on compelling foreign investors to make significant technology-transfer commit ments as a condition of dieir investment. The new policy moves die emphasis away from tech nology, and squarely on to hard cash. "The implications of this new policy are perverse," says one industry insider. "The Government is prepared to accept foreign money for die local aviation industry because Indian backers don't have any cash, but diey're closing die door on die people who can help us most widi die tech nology: die foreign airlines." The immediate casualty seems likely to be Singapore Airlines (SIA), which has been trying to get a $600 million airline project started widi India's Tata group. Every since the group sub mitted its proposal in February 1995, it has met obstacles from vested interests, fearful that Tata/SIA would swamp the fledgling private- airline industry. That was until December 1996, when the 42 FLIGHT INTERNATIONAL 26 February - 4 March 1997
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