Wednesday, November 16, 2011

BJP's Rudi says FDI in civil aviation will 'annihilate' domestic airlines

Bharatiya Janata Party spokesperson and former civil aviation minister Rajiv Pratap Rudy has sounded the alarm that if foreing airlines were allowed to come in through the Foreign Direct Investment (FDI) route, then that would 'annihilate' the Indian airlines -- national as well as private.  But he had no solutions to offer as to how the sector should get out the mess it is in.

BJP's blind opposition to FDI is nothing new. Its senior leaders Murli Manohar Joshi, Yashwant Sinha have voiced their opposition to FDI in parliament. Joshi told the government not to allow FDI in the retail sector.

Rudi said that his party is also opposed to any bailout package for Kingfisher.

As a former civil aviation minister, who knows a bit about the sector, he said that mergers have only landed the airlines in the red, and gave the examples of the merger of Air India and Indian Airlines, Kingfisher and Deccan Airways, Jet Airways and Sahara. He said this was due to the flawed policy abut mergers.

He explained that the route dispersal guidelines directed that 10 per cent of the trunk routes -- that is those between metro centres -- should be for running flights to Jammu and Kashmir, north-east states, Andaman and Nicobar Islands, Lakshadweep. Rudi defended this guidline saying that "connectivity which is essential for social and economic reasons". Most of the private airlines, including the beleaguered Kingfisher, are complaining that it is because they are forced to serve the uneconomical routes that they run into losses.

Rudi also blamed Air India for slashing ticket prices and forcing the others -- the private players -- to do the same.

He said that growth in civil aviation sector as late as 2008-2009 was 35 per cent to 45 per cent. Now it is 12 per cent to 15 per cent. He said that civil aviation growth is one-and-half per cent the rate of national growth. If the GDP is seven per cent, then aviation should grow at 10 per cent.

Rudi warned that the day foreign airlines have equity participation, there would be cartelisation. He said that Emirates has already positioned itself strongly.


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