January 19, 2012

49% FDI in Airlines: A Good Step?

The proposed move to allow 49% FDI in Airlines sector in India is a welcome step. When most of the Indian air carriers are moving through an awful financial condition, this is the best available alternative.

Earlier, this figure was bouncing around 24% and 26% when 26% was expected to be the upper limit of the cap. However, the safety audit performed by the DGCA earlier this month convinced the government to go for the maximum FDI.

The airline industry witnessed a slump after Kingfisher Airlines CEO Vijay Mallya cancelled a large number of flights because of heavy losses in most routes. If that was not enough the debt-ridden Indian Airlines saw its pilots playing hide and seek game with the management.

While many people may term this step as surrendering before the foreign powers, but this is the need of the hour and the best possible step to bail out the ailing airline sector in the country.

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