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Vijay Mallaya insists for foreign investment in Indian airlines
November 17, 2008
Vijay Mallya, chairman of debt-laden Kingfisher Airlines, has insisted New Delhi to permit foreign airlines to take venture of up to 25 per cent in Indian carriers to help the below par aviation industry carry on pressing financial difficulties.
Mr Mallya, head of an empire that spreads from alcohol to aviation interests, said in an interview that he was “approached constantly” by foreign carriers seeking tie-ups with Kingfisher, which is one of India’s two largest private airlines and renowned for its attentive service.
New Delhi forbids international airlines from taking stakes in Indian carriers, even though it allows investors such as funds to take stakes of up to 49 per cent. Mr Mallya said that he was lobbying the government actively to ease this “very restrictive” policy.
“If anybody really recognises the value of an airline, it’s another airline,” Mr Mallya said. “If a foreign airline that considers India an important strategic market is able to pick up 25 percent, that could be a huge wealth creator. It will be a huge bonus to the industry; the values will shoot up very considerably.”
Mr Mallya said he expected the government to give serious consideration to easing investment restrictions because of the “gravity of the situation” meet head-on Indian carriers, which are forecast to lose a combined $2bn this financial year.
India’s private airlines, including Jet, the premium carrier, and IndiGo and SpiceJet, the low-cost carriers, are scrambling for cash to help them cope with a grasp stemming from rising costs and declining traffic. After growing about 25 per cent a year for three years, Indian passenger numbers have fallen sharply since June, when surging oil prices pushed up fares. From July to September, passenger numbers were down about 15 per cent year on year.
Kapil Kaul, India chief executive of the Centre for Asia Pacific Aviation, said that allowing foreign airlines to take stakes in Indian carriers would help the Indian industry ride out its current difficulties. “If you have a foreign airline on your board, to sell a story to an investor becomes easier. They will help other institutional capital to come.” Mr Kaul said.
Mr Mallya, head of an empire that spreads from alcohol to aviation interests, said in an interview that he was “approached constantly” by foreign carriers seeking tie-ups with Kingfisher, which is one of India’s two largest private airlines and renowned for its attentive service.
New Delhi forbids international airlines from taking stakes in Indian carriers, even though it allows investors such as funds to take stakes of up to 49 per cent. Mr Mallya said that he was lobbying the government actively to ease this “very restrictive” policy.
“If anybody really recognises the value of an airline, it’s another airline,” Mr Mallya said. “If a foreign airline that considers India an important strategic market is able to pick up 25 percent, that could be a huge wealth creator. It will be a huge bonus to the industry; the values will shoot up very considerably.”
Mr Mallya said he expected the government to give serious consideration to easing investment restrictions because of the “gravity of the situation” meet head-on Indian carriers, which are forecast to lose a combined $2bn this financial year.
India’s private airlines, including Jet, the premium carrier, and IndiGo and SpiceJet, the low-cost carriers, are scrambling for cash to help them cope with a grasp stemming from rising costs and declining traffic. After growing about 25 per cent a year for three years, Indian passenger numbers have fallen sharply since June, when surging oil prices pushed up fares. From July to September, passenger numbers were down about 15 per cent year on year.
Kapil Kaul, India chief executive of the Centre for Asia Pacific Aviation, said that allowing foreign airlines to take stakes in Indian carriers would help the Indian industry ride out its current difficulties. “If you have a foreign airline on your board, to sell a story to an investor becomes easier. They will help other institutional capital to come.” Mr Kaul said.
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