'FDI To Boost Airlines, Airports And Regional Connectivity’

Ankur Bhatia, executive director of the Bird Group, conglomerate dealing from aviation, hospitality to education and also a member of the Confederation of Indian Industry (CII’s) National Committee on Aviation spoke to BW Businessworld on the 100 per cent FDI in aviation and its impact on the sector as a whole.

Excerpts:

How fruitful will be the 100 per cent Foreign Direct Investments (FDI) in Aviation sector?
The aviation industry acts as an enabler to the growth of a nation’s economy and has a spill-over impact by helping build connections and enabling businesses. The Indian aviation industry is poised to become the world’s third largest travel market by 2026 and is one of the fastest growing markets in the world.

The industry is growing rapidly marking a year-to-date growth of 16.5 per cent in 2015. The cumulative figures for May 2016 showed a similar trend, which indicates that the industry is very dynamic, especially within the domestic segment. Existing airlines are looking to expand rapidly and the market is also witnessing launch of new airlines such as Vistara and AirAsia. Therefore, there is a need continuous investment in terms of new fleet and improved technology for which capital is required.

What will be its impact on the airlines?
We believe that the recent move by the government for opening up the industry to 100 per cent ownership through FDI is surely a positive one. The initiative will provide much needed cash flow for domestic airlines thus allowing them ample opportunity to raise funds to invest in their growth plans. Moreover, the allowance of 100 per cent FDI in airport will aid modernization of aviation infrastructure and also boost regional connectivity within the country.

Was it necessary or just a panic button from the government?
As shared earlier, we believe the current initiative by government to allow 100 per cent FDI in Indian aviation industry will give the industry a much needed boost. The travel and aviation industry has been pushing for these reforms since long and we welcome the same.

Who is going to leverage more benefits out of it?
We believe, the initiative is expected to provide domestic airlines much-needed cash flow that will allow them to invest in fleet and improved technology for ground as well as flight operations. The FDI will also enable domestic airlines to partner with international brands that will also bring best international management practices, thus empowering them to be at par with international standards.

Having said the above, we do believe that the ultimate beneficiary from this initiative will be the passengers. With FDI bringing in capital influx, domestic airlines will be able to invest in fleet to meet the criteria 0/20 competition and fly internationally. As a result, passengers flying domestic as well as internationally will have access to multiple options, better connectivity, improved quality as well as competitive fares.