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18.10.12



Indian government allowed foreign airlines to buy stakes upto 49% in local carriers. This is a life line for few of airlines like Kingfisher, Spice jet and Go air. It will be threat for Jet airways, Indigo and Air India. FDI or any other source of money is needed to feed Indian aviation industry to grow. Our affluent riches need more luxury rather than just transport. Indian market is growing enormously, these changes made aviation industries to invest more to provide better and luxury transportation.

Advantage’s of FDI
Kingfisher will have a big advantage since it is little less than the position grounded. After investments, Kingfisher will be on better edge and start working smoothly and shall clear employee’s payment.
Kingfisher is already in talks with gulf and other airlines to get investments. Kingfisher is the first airliner in Asia to order 20 of Airbus-380 and Airbus-350. Jet airways have also ordered Boeing Dream liner’s which will be delivered by 2016. Kingfisher is canceling their orders with manufacturer to pay their fuel bills and taxes.
Many of Indian airliners are already speaking to gulf airliners like Qatar and Royal Jet to Invest in Air Deccan. They are just waiting for final flag down from government to jump in. 
Foreign Investors are very interested to invest on Indian Air because the Indian Air routes will be busiest and hot spot destination by 2020.
FDI
Year
Passengers
Cargo
Airlines
Airports
Profit
2011
2.5 billion
45 million tons
920
4,200
$ 350 million
2012
3.2 billion
49 million tons
920
4200
$ 400 million

 
Disadvantage’s of FDI
After Indian government finally calls the FDI into Indian Aviation the scenario will force India to make huge changes in Infrastructure and development which is not a good sign for Indian economy.
The changes like different Taxation policy and India may need to allow more of foreign players to work and fly to India.  In this process it may create artificial imbalance in the market. Indian government may provide subsidies to Investors to Gain profits.
Indian airliners are not performing well in the market , they are at loss from past few years. Kingfisher is in steep loss of 2.328Cr, Spice jet stood at 13.500Cr loss. Air fares may cost more as fuel and other services will be increased. To avoid this Indian Government may bare the excess prices to avoid Borden on the economy.

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