Indian Commercial Aviation: Poised For Expansion

By Jay Menon
Source: Aviation Week & Space Technology
December 30, 2013

If turbulence and uncertainty best describe the last few years for the Indian commercial aviation sector, there are signs of a turnaround ahead.

With global airlines and investors with deep pockets coming together, India's ailing aviation sector could finally feel some wind beneath its wings from the start of operations by Etihad, AirAsia and Singapore Airlines (SIA), along with their Indian partners in 2014.

While Tata-SIA will launch a full- service airline, Malaysia's AirAsia will start a low-cost carrier, again with the support of Tata.

“Since both SIA and AirAsia have strong international partners in Southeast Asia, India can expect a greater outbound emphasis in Asean countries who are already tourist-friendly. And with the Jet-Etihad deal already sealed, we will soon be able to see strong domestic-international tie-ups both east and west of India,” says Sanat Kaul, chairman at the International Foundation for Aviation, Aerospace & Development.

The Jet Airways-Etihad deal will bring together one of the largest airlines in India with a well-capitalized Persian Gulf carrier with global ambitions. Abu Dhabi-based Etihad will inject $600 million in equity into the Indian private carrier and help the debt-ridden airline strengthen its balance sheet and focus on fleet expansion.

“This will be a game-changer for Indian aviation, the roots of which lie in the Foreign Direct Investment (FDI) reforms of September 2012,” says Amber Dubey, partner and head of Aerospace and Defense services at global consultancy KPMG.

In September 2012 the Indian Government decided to allow international airlines to invest in Indian carriers. Its goal was to secure capital for existing domestic airlines which were grappling with debt. However, in March 2013 the Foreign Investment Promotion Board (FIPB) ruled that foreign airline investment is not limited to existing carriers.

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