Despite various hurdles plaguing the first aviation foreign direct investment (FDI) deal between Jet Airways and the Abu-Dhabi based Etihad Airways, the Centre for Asia Pacific Aviation India (CAPA India), an advisory, research and knowledge practice, expects an infusion of $1.3 billion (Rs 7,760 crore) of foreign money into the Indian carriers in the next few months.
However, CAPA India cautioned in a report that regulatory interventions and structural challenges may subdue investor interest.
According to ‘CAPA India Aviation Outlook Report FY14’, “estimate of (foreign) funds includes $700-750 million of investment in equity in up to three Indian airlines, including Jet Airways, and a further $550-600 million in additional financial assistance such as access to foreign exchange loans at lower interest rates and sale-and-leaseback income from assets such as aircraft and airport slots”.
Besides Jet whose deal with Etihad has run into rough weather, other Indian carriers such as SpiceJet and GoAir are reportedly in talks with various foreign airlines for possible investment.
Elsewhere, the government is expected to continue liberalising bilateral agreements in the aviation sector in the coming months. “India is estimated to be faced with requests from foreign governments for an additional 175,000-200,000 weekly seat entitlements over the next 2-3 years, mostly from the Middle East markets such as the UAE, Qatar and Turkey, as well as Hong Kong and Singapore,” the CAPA India report said.
It expects more foreign low-cost carriers to enter India in next 12 months. Air Asia India is likely to receive approvals in the next few weeks. Its operations are expected to start by October-end.
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