Aviation sector reforms may not be coming forth, but offers are flowing in for low-cost carrier SpiceJet’s stake.
The Business Standard today reported Etihad and Qatar Airways are in discussions with the Kalanidhi Maran-controlled airline for a minority stake. In April, the Financial Express had reported that Emirates was interested in picking up a stake too.
“Various investors have approached SpiceJet and we are in talks with them,” SpiceJet spokesperson was quoted as saying in today’s report. He, however, did not offer any comment on the latest speculation to do with particular buyers and said no deal has been finalised yet.
True, the company cannot finalise any for now, as the government has not yet taken a decision on allowing foreign carriers to pick up stake in their Indian counterparts. The government has been trying to push through the reform, but has not been able to do so due to stubborn resistance from its allies.
According to media reports, Civil Aviation Minister Ajit Singh has held discussions with the Trinamool Congress over the issue, but reached no consensus.
Global aviation majors have not evinced much interest in buying stake in Indian carriers due to mounting losses and lack of a level playing field as the government supports Air India.
A survey recently found that the lukewarm response from the foreign airlines was owing to the high operating expenditure and lower fares that hit the profitability of airlines in India.
The government was trying to rationalise taxes on jet fuel and resolve the issue of service tax on air travel, said the minister in response to the depressing survey finding.
“The situation needs to be addressed,” Ajit Singh was quoted as saying in the media reports.
A research report by ICICI Securities said reforms were key to profitability of the sector. Some of the Indian airlines are attractive due to their presence in the regional market. The government has to act fast, before this interest fades.