The Indian Government is considering reversing its ban on foreign airlines taking an equity stake in domestic operators. The ban was enacted earlier this year by the administration led by prime minister Deve Gowda. His replacement in April by a new leader has led to a reconsideration of the move, however.

The ban effectively blocked the Tata/Singapore Airlines plan to set up a domestic operation and forced the country's most successful private operator Jet Airways to look for investors to replace the 40% of equity owned by Gulf Air and Kuwait Airways. The replacement of Gowda with I K Gujral has led to a government reshuffle which has seen the position of the architect of the ban, civil-aviation minister C M Ibrahim, undermined.

While the position of the ban is confused and liable to change by the week, Gujral has indicated that an open-skies policy must be followed if the countries economic liberalisation plan is to succeed.

The new policy being prepared by finance minister P Chidambaram and his cabinet colleagues appears to be moving towards a consensus that foreign airlines should be allowed to hold up to 26% in domestic airlines.

Source: Flight International