The euphoria over the government's decision to permit foreign carriers up to 49 per cent stake in domestic skies will be tempered, with the civil aviation ministry deciding not to give fresh licences to set up a greenfield airline for the time being.
Speaking to Business Standard Civil Aviation Minister Ajit Singh said, "We are not giving licences for greenfield airlines. As of now, FDI (foreign direct investment) in aviation can come only through existing airlines." Under the current policy, a start-up airline has to get a no-objection certificate from the ministry, tantamount to a licence. After that, it has to get a scheduled operator's permit. The DGCA (directorate general of civil aviation) also has to clear the airline's security preparedness.
Singh said another call would be taken once the ministry, working on an "aircraft acquisition policy", evaluated demand for planes in relation to the estimated passenger growth and orders placed by domestic carriers.
On the one hand, the move limits the choice of foreign carriers to only three-four Indian companies looking for foreign equity - mainly, SpiceJet, GoAir and Kingfisher Airlines. But, on the other hand, it provides breathing space to domestic carriers such as Air India to put their operations in order.
The Centre for Asia Pacific Aviation (Capa) projects the Indian aviation industry will more than treble over the next decade, emerging the third largest market in the world. Capa's India head Kapil Kaul says, "It takes about $100 million to start an airline. There are many in India who would be ready to invest $50 million and tie up with carriers such as Air Asia, Jet Star and Tiger Airways."