March 9, 2017 TnH Global

Qatar Airways plans first fully foreign-owned airline in India

India may soon get its first fully-foreign owned airline after the Modi government allowed 100% FDI in the sector last June. Qatar Airways CEO Akbar Al Baker said in Berlin Wednesday that he plans to start an airline in India with the investment arm of Qatar government.

A Qatar Airways spokesperson quoted the CEO saying that since India now allows 100% FDI, he plans to do so with Qatar Investment Authority. Baker also said that he will be making an application to launch a domestic airline in India soon. Qatar Airways has for many years been eyeing a stake in IndiGo but the Indian budget carrier has not done so.

Last June, the Modi government had allowed Indian carriers to be fully owned by foreign entities. While foreign carriers will still be required to have up to 49% stake in airlines here, they can now get a foreign partner — like a sovereign wealth fund or an institutional investor — and not look for an Indian partner to put in the remaining 51%.

However, India is yet to review the issue of “substantial ownership and effective control (SOEC)” in the fully-foreign owned airlines it had allowed last June. Currently, flying licences are given to an airline in India only if its chairperson and two-third of the directors are Indians and if the SOEC is with Indian nationals.

The issue of SOEC being with Indians arises at two times — issuing the operating licence and giving bilateral rights that India has to its airlines for flying abroad. The requirement of SOEC is also a condition from International Civil Aviation Organisation (ICAO) regarding bilateral rights.
Which means if an Indian airline has more than 49% foreign ownership, then there may be an issue in getting the bilateral rights for flying abroad. But there will be no bar on flying within India.

At present, only three Indian carriers have investment by foreign airlines. Abu Dhabi’s Etihad has a 24% stake in Jet Airways. Tata Group holds 51% stake in Vistara and AirAsia India each, with Singapore Airlines and AirAsia Berhad having the remaining 49% in them respectively.

News Source: timesofindia.indiatimes.com