Article Posted on : - Nov 18, 2008

UB Group Chairman Vijay Mallya during a session on Travel, at India Economic Sumit 2008 in New Delhi on Monday. PTI Photo

NEW DELHI (PTI): Kingfisher Airlines Chief Vijay Mallya said he has been approached by international carriers for a stake in his airline, and asked the government to first lift the bar on foreign shareholding in airlines.

"Kingfisher can't sell 25 per cent to any airline until the government permits it. That does not stop people from expressing interest," he told reporters on the sidelines of the India Economic Summit here on Monday.

Allowing foreign airlines and strategic investors to hold up to 25 per cent stake in the domestic airline companies is among the many demands submitted to the government by the Federation of Indian Airlines, a lobby group of the civil aviation industry, Mallya said.

"This is because they (carriers) will value much better and in a fairer manner than a pure equity investor," Mallya said, while refusing to share details on which airline has approached him. "I have received several Expressions of Interest from foreign airlines as the Kingfisher network is unparalleled. However, I cannot give details. I have requested the government to allow foreign airlines to acquire up to 25 per cent... As I believe aviation should be treated as per international norms," he said.

The current policy allows FDI up to 100 per cent in other areas of aviation like developing of green field airports or in cargo and maintenance,repair and overhaul facilities.

Kingfisher last month joined hands with Jet Airways to drastically reduce operational costs by sharing engineering, ticketing, ground handling and other services and both are trying to raise about $400 million to come out of the red.

On allowing foreign investment in the sector, Cabinet Secretary K M Chandrasekhar had recently said that there was no such plan in the immediate future. "The present policy itself is quite liberal. I do not think that there is any such thinking of more liberalisation. At least, I have not come across this till now," Chandrasekhar said.

Mallya said aviation industry should be treated on par with other industries “where strategic investors can invest. This will be an enormous wealth creator and (would be able to) secure the future of Indian aviation.”

As the Indian airline industry passes through a major financial crisis, the government has set up a high-powered Committee, headed by Chandrasekhar, to recommend ways and means to help the industry beat the slowdown. The panel has been tasked to consider the global scenario and practices in the aviation industry and recommend short and long-term measures to enable sustained growth and health of the Indian aviation sector.

With fuel costs becoming a major factor in affecting the health of airlines, the Centre has already reduced the base price of aviation turbine fuel (ATF) and abolished the five per cent customs duty that was being charged on it.

The Committee could soon ask the state governments to lower their sales tax on jet fuel to provide further relief to the beleaguered airlines.

In this regard, the Finance Ministry is holding discussions with the Empowered Committee of State Finance Ministers to find a solution to the entire issue. The industry is demanding that ATF be included in the declared category list, which will bind the states to tax jet fuel by only up to four per cent.