Relaxed FDI norms will ensure increased competition in the “huge” domestic aviation sector but foreign airlines will never be allowed to fully own a domestic carrier, a top government official said today.
In a significant reform measure aimed at bolstering the country’s high growth potential civil aviation sector, the government has allowed foreign entities, except overseas carriers, to own up to 100 per cent stake in local airlines.
Besides, 100 per cent Foreign Direct Investment (FDI) has been permitted through the automatic route in brownfield airports.
“There will be more and more competition (in aviation sector). That is the signal that is going out,” Civil Aviation Secretary R N Choubey told PTI about the relaxed FDI norms and their long-term impact.
“With 22 per cent growth rate I think it is a huge market for anybody to come and invest,” he said.
India’s domestic traffic has been growing in double digit since last 21 months owing to a host of factors including low fuel prices, ease of doing business and capacity augmentation by the domestic carriers, among others.
Driven by low fares, domestic air travel witnessed an increase of around 21.63 per cent in number of passengers last month as compared to May 2015.
According to an analysis conducted by the ministry, air fares declined by 18.1 per cent in the February-April period of this year over the same period of 2015.
While 100 per cent FDI has been allowed in airlines, the limit for foreign carriers remains at 49 per cent.
“Foreign airlines will not be allowed to invest more than 49 per cent. A foreign airline will never get to own a (Indian) airline,” Choubey said. William Hayes Womens JerseyShare This