Airlines must decide what’s best for them

Font Size

Print

Feedback

Email

Discuss

: It is puzzling that organisations with the most experience in their domain, ie, foreign airlines, are specifically the ones that have been excluded from investing in Indian airlines, whereas anybody or any organisation without any relationship with the industry, except in their personal capacity, may do so. No clarification for this policy of creating barriers to prevent foreign airlines from participating in the financing of an Indian carrier has been given. A possible reason could be to protect state-owned Air India from the benefits that may accrue to private carriers from the injection of foreign capital and managerial expertise.

The argument that some airlines could unduly benefit by getting foreign managerial expertise in this manner carries little weight. On the whole, the managers of Indian carriers have shown that they are able to acquit themselves very well on issues of competitiveness and managerial skills. In fact, some Indian carriers have foreign CEOs and foreign senior personnel, not to mention flying crew, and there is no bar on them. There are some specific areas where such expertise maybe useful, eg, in yield management in a very competitive field, or fuel management, or building up safety management systems, or expanding networks with tie-ups with foreign airlines, to name a few specialised areas. Improving these areas will help both carriers and passengers.

That Indian carriers may be swamped by funds and bullied into accepting FDI is an invalid fear. The Indian financial market and finance managers of Indian carriers will only look for such funds as they judge to be beneficial to their business. Nor are international carriers likely to make funds available unless they see clear benefits. The managerial abilities of Indian managers can be counted upon to make good decisions in these aspects of the industry.

Another fear could be that monies obtained through illegal means may be used to fund some carriers. Considering the variety of sources for funds, it is difficult to imagine that the source of each and every fund being provided from abroad can be adequately monitored to meet policy provisions. Without the capability to quickly assess or trace a fund to its ultimate source, the practical implementation of the stipulation that prevents an Indian carrier from accepting investment from a foreign airline, directly or indirectly, is very difficult if not impossible. Similarly, it is difficult for the money from any other ‘permissible source’ to be tracked to its origin.

Another issue is the difference in criteria applied within the same industry, viz, airports and airlines. Why is there a change in criteria for investment in airlines?

Fears of lapses in security, if foreigners work at our airports and airlines, does not drive this policy. If foreigners, who are very likely to come with the investment in MROs, can be appointed in sensitive positions to maintain the aircraft of Indian carriers, or fly seaplanes and helicopters or cargo aircraft, or provide ground handling services to airlines—loading baggage and cargo onto aircraft—then security is not the key issue. Even now there are a large number of foreign pilots and crew operating in Indian carriers and are, obviously, not considered security risks.

We are painfully aware of the difficulties and the time it takes to operate a business in India. Why load an industry, which is difficult enough to operate at the best of times, with additional barriers and controls? It behoves the government to remove barriers and let the airline industry set the pace as a forward looking, fast growing, multi-national business that can, and does, manage challenges in a mature manner.