India's civil-aviation policy has again been thrown into doubt following the fall of the country's United Front Government, which came only weeks after a ruling that foreign airlines would have to sell any shares held in Indian domestic carriers.

India's acting aviation minister, C M Ibrahim, passed the ruling early in April, saying that foreign-airline investment in India's recently liberalised domestic market would hurt Indian Airlines just as it was beginning to recover. The state-owned carrier is expected to register its first profit of $26 million in 1998.

Ibrahim says that foreign stakes would have to be sold within six months, and has turned down the proposed venture between Singapore Airlines and the TATA Group to establish a new domestic operation (Flight International, 9-15 April).

The controversial decision is in some doubt, however, following a show of no-confidence in the Government of Prime Minister Deve Gowda, with whom Ibrahim is closely allied.

A new Government is to be appointed shortly.

If Ibrahim's ruling is allowed to stand, the greatest impact would be felt by India's second-largest domestic carrier, Jet Airways, in which Gulf Air and Kuwait Airways each have a 20% stake. "Non-aviation" companies and airport operators are still allowed to hold a maximum 40% stake in a domestic airline, however, which could provide a loophole for the Jet Airways investors because their stakes are held at arm's length in an offshore holding company, Tailwinds, registered in the UK's Isle of Man.

Jet Airways says that it still plans to take 14 more Boeing 737-800s into its fleet by the end of the year, but industry analysts warn that the first batch of three aircraft in July is partly financed by funds from the foreign partners.

- Air India is studying a package of aircraft sales, refinancing and debt-restructuring measures, designed to raise around $200 million as part of the airline's efforts to shore up its ailing finances.

The package now being worked out by the Indian flag carrier is expected to include the sale of two Boeing 747-200s, which is expected to raise $40 million and the sale and leaseback of other aircraft.

Air India is also keen to seek $71.4 million in loans from financial institutions and release $25 million through credit. A $10 million local bond issue and another $15 million through a Japanese loan are also planned. finally, improved collection of debts is expected to free $28.5 million.

Source: Flight International