Indian Aviation Industry Gets A Boost

Sunday, 6th October 2013 at 05:00am

The Civil Aviation Minister Ajit Singh was quoted as saying that the growing interest of foreign airlines in the Indian aviation industry indicates their confidence in the sector which has been struggling in the past eight years.

After the Indian government relaxed its FDI policy on commercial aviation business in September last year, foreign airline companies started to take interest in the sector, beginning with AirAsia Bhd of Malaysia.

Early this year, the region's pioneering budget carrier founder, Tony Fernandes, struck a deal with Tata Sons of India in a joint venture to set up a local subsidiary of its highly successful low-cost airline, AirAsia. Thus AirAsia India was born.

A few months later, Etihad Airways, the national flag carrier of United Arab Emirates finally sealed a 24% stake purchase deal with India's second largest airline, Jet Airways. Long before the formal signing of the deal, the rumor of Etihad's plan to invest in an Indian carrier persisted throughout India and even made headlines.

More recently, Singapore Airlines has indicated its foray into the Indian local aviation market through partnership with Tata Group, the same conglomerate that has inked a similar deal with AirAsia.

But unlike its joint venture with AirAsia Bhd. Tata Group's partnership with Singapore Airlines will give rise to a full-service airline.

Singapore Airlines consistently ranks as one of the world's best airlines.

According to the Aviation Minister, the entry of Singapore Airlines will usher in a renewed interest in the local aviation industry, which is now slowly recovering from the crisis. He further said that more players are needed in the industry to benefit not only the local economy but also Indian air travelers who need more choices.

When sought comments on high fuel crisis that has long been the primary concern of local airline companies, the minister said that they will get the fuel a notified category item.

Indian carriers have long complained of high fuel prices making up almost 50% of their operating costs. The state has reiterated that jet fuel prices should not be subsidized causing airline companies to bear the entire weight of jet oil cost, thus making it very hard for them to make profit.

Jet fuel price in India is almost 60% more expensive than in Bangkok, Dubai and Singapore.

By: Pete Lee.