Major economic news from India - the almighty hand of the markets!

BBC:

http://www.bbc.co.uk/news/world-asia-india-19596091

Times of India:

http://timesofindia.indiatimes.com/b...-aviation/articleshow/16397960.cms

To clarify further, the cabinet decided that Foreign Carriers are now allowed to take up to a 49% stake in Indian domestic airlines.

The Hindu clears it up:

http://www.thehindu.com/business/Industry/article3897297.ece

So Namaste, BA, SQ, EK and others!

Could this be the move that saves aviation in India, or further complicate it further? Could this move help save airlines, or put the final nails in their coffins?

Quoting RWA380 (Reply 2): Could this be the move that saves aviation in India, or further complicate it further? Could this move help save airlines, or put the final nails in their coffins?

It is too late. If all the carriers have so much debt and who wants to invest on them. And where is their (GOI) Aviation policy anyway?

Quoting airdfw (Reply 3): It is too late. If all the carriers have so much debt and who wants to invest on them.

It may be too late for Kingfisher, but I expect some deals to follow. There are reports that SpiceJet is in discussion with Gulf carriers.

I don't really see how this changes anything. At the end of the the day, the decision-making ownership percentage remains outside the control of foreign investors/carriers so why take the risk? Let's not forget that the Indian government has been less than sane, predictable, and consistent in terms of transport (and in particular aviation) policy. This is not even mentioning that they own AI... a huge potential for fireworks. It just seems really risky to sink large sums of investment into any Indian carrier. Now if the politicians have opened this door with a view to allowing large amounts of money into the country without raising suspicion to then be distributed under the table then we might see a big change.

YOWza

Finally some long awaited reforms were passed. Kingfisher will now stay a float. Expect BA or a gulf carrier to buy up 49% of Kingfisher to gain an Indian Domestic network. Kingfisher needs good management once it is in the hands of another carrier things will turn around.

Quoting yowza (Reply 5):

yowza, this is a very big deal in India and is part of an all or nothing 'big bang' reform by the GOI. It is possible that it may lead to the downfall of the current government if the Left has its way. While the waters are muddied by now, the market has huge potential for growth and you can buy a good chunk of an Indian carrier at fire sale prices today.

I really have to salute the PM for this bold move, and I am also thrilled about international brands entering (and competing) in the retail market.

Would BA /IAG be in the marker for a stake in an Indian airline after the recent aquisition of BMI?

Quoting yowza (Reply 5): At the end of the the day, the decision-making ownership percentage remains outside the control of foreign investors/carriers so why take the risk? Let's not forget that the Indian government has been less than sane, predictable, and consistent in terms of transport (and in particular aviation) policy. This is not even mentioning that they own AI... a huge potential for fireworks. It just seems really risky to sink large sums of investment into any Indian carrier.

When I read the story on BBC that never crossed my mind, but you are right.

I thought the Indian economy was on the up, or has that story changed now?

Quoting yowza (Reply 5):

I completely agree. Who is going to want to sink money with no majority vote and a conflict of interest with the regulator?

Quoting babybus (Reply 9): thought the Indian economy was on the up, or has that story changed now?

The 'India Story' is in deep doo-doo right now, my Indian friends tell me. Rampant corruption and mismanagement is killing the golden goose. It's still doing better than most countries however, and the economic potential is humungous. Ignore India at your peril, they say. Single Indian companies have market caps larger than the entire listed value of companies in either Pakistani, Bangladeshi or Srilankan exchanges.

Apart from corruption, other major growth barriers include lack of infrastructure investment in power and transportation, shortage of skilled workers, and the overhang of a majority of very, very poor people.

Now who will invest in AI.  

Quoting RWA380 (Reply 2): Could this move help save airlines, or put the final nails in their coffins?

Both.

Quoting desiguy2447 (Reply 6): Kingfisher will now stay a float. Expect BA or a gulf carrier to buy up 49% of Kingfisher to gain an Indian Domestic network.

I do not see the ROI for IT. The debt is too high. But this could be big shot for 9W.

Quoting lightsaber (Reply 12): I do not see the ROI for IT. The debt is too high

They could go into a per-packaged receivership and the creditors may find a price attractive to all. I wonder what Mallya's end game is; he has been waiting for this day a long time.

In the short-medium term I don't foresee any activity by IAG but I wonder whether in the long term IAG might seek to set up a BA franchise in India with IAG holding a minority stake. I believe this was something BA was looking at a few years ago, with the use of an intermediary to circumvent ownership restrictions.

Quoting golfradio (Reply 10): I completely agree. Who is going to want to sink money with no majority vote and a conflict of interest with the regulator?

If there are only two owners I agree but say there are 5 each holding 20% it may be very different. Depending on who the other owners are of course.

Deleted 10char

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[Edited 2012-09-14 13:04:42]

Quoting yowza (Reply 5): Now if the politicians have opened this door with a view to allowing large amounts of money into the country without raising suspicion to then be distributed under the table then we might see a big change.

There's no need to open this door - it is already open. Black money is the money which has been invested in Indian carriers for almost two decades.. This is the reason why airlines like 9W have so much political clout.

Quoting desiguy2447 (Reply 6): Finally some long awaited reforms were passed. Kingfisher will now stay a float. Expect BA or a gulf carrier to buy up 49% of Kingfisher to gain an Indian Domestic network. Kingfisher needs good management once it is in the hands of another carrier things will turn around.

Kingfisher has too much debt. It would be easier for a gulf carrier/IAG to start a fresh carrier than to try to turn Kingfisher around. Also, due to the waiting period for FDI, it really seems unlikely that Kingfisher will be able to continue flailing for more months now...

Quoting lightsaber (Reply 12): But this could be big shot for 9W.

Doubtful. The current investors in 9W wouldn't like that too much.

KFA's usp lays in its Intl rights. Their orders for the A380 are still valid. A BA or EK can change the game on the basis of these 2 factors.
Most or all of KFA's debt are held by govt owned banks and this is one of the reasons KFA has survived till date, the GOI is not soooo stupid as to write this amount off. If the banks can be convinced on accepting IOUs, they will prefer a fewer paisa in the rupee rather NO Rupee, over 5yrs the gestation period for a new airline to start flying Intl the banks might recover all their dues, at least they can hope to.
The KFA brand equity is still strong in India simply because there is no other brand existing in it space. The average Indian carpet bagger is a half literate ( even if a graduate because he has got his cert by graft) street smart trader, for him travelling on a original KFA first class out of India is a big buzz. My money is back on KFA............I might be wrong.

The 800lb gorilla in Indian aviation is KERALA. If they manage to get to fly Intl with their new start-up airline, this can cause problems for all the existing players, not to mention KFA. Personally i hope the GOI does away with the 5yr / 20 ac rule, aviation needs to be unfettered.

If the FDI in retail and Aviation stays for good (1YR) we will see a boom in Freight operators, due to India's poor Infrastructure most of the perishables and just in time electronic are likely to travel by air.

India is extremely important for global aviation, it is inevitable that a global airline or maybe more will emerge from this country in the near future. The likes of BA, LH, EK and SQ depend on India for more than 10% of their revenue. Indians make up for the most upwardly mobile immigrant class in the world after the BRITISH. There more people of Indian origin in USA, EU and rest of the world in positions of power, be it in politics, finance or industry among the immigrant population. This catchment makes up the largest traveller in the world today - a fact stated by Bob ayling of BA in 1997 , with greater economic growth we will see larger numbers of tourist too originating from this country.

The airline story is actually a small part of the larger story here.

Keep cautious everybody - the last time this government tried a reform like this, it was rolled back quickly in the face of political opposition.

Capital injection from a foreign carrier counts for nothing ... if the airline's management maintains stranglehold on the right to make faulty decisions ... if the airline continues to be inefficiently operated ... if the corruption continues ... if service falls behind the standard that India has the vast potential to deliver ... if governments continues to tax the industry to death ...

What's to say that a future government cannot or will not reverse the decision of this government and foreign carriers will have to pull out ...

But if I have the cash, I would go for IndiGo ...

KC Sim

Quoting tayaramecanici (Reply 18): KFA's usp lays in its Intl rights. Their orders for the A380 are still valid. A BA or EK can change the game on the basis of these 2 factors.

There is a strong rumour going around that Etihad will take a stake in KF which is to be disclosed at the AGM. Any substance in this or is it rubbish

Quoting desiguy2447 (Reply 6): Kingfisher needs good management once it is in the hands of another carrier things will turn around.

KF needs better mgmt...but if the 49% FDI will turn things around.....there are doubts....Rs8500cr loss is a huge one to overcome.
A fresh startup carrier would be easier to get FDI.

I don't know if I am that impressed with the Indian culture after the AI drama, I guess I was just clueless about India or not interested before. I know some outsourced IT projects have failed bad in India before, Intel had a bad snag on a new CPU that the Israelis salvaged later.

Maybe its wise to learn culture before doing business in a new country? Many companies in the western world seem to think outsourcing is a dance to up your profits, I think many have learned a hard lesson?

Quoting sweair (Reply 23): I don't know if I am that impressed with the Indian culture after the AI drama, I guess I was just clueless about India or not interested before. I know some outsourced IT projects have failed bad in India before, Intel had a bad snag on a new CPU that the Israelis salvaged later.

You raise a very good point, though we are digressing from the core discussion, it does have an impact on getting to ''know the devil''.
Why is it that Indians are very successful outside of India (JLR, Arcellor Mittal etc) and make up the largest non-caucasian race among the progressive communities in the west. The answer lies in understanding the civilisation, when the Vikings were having a orgy in europe with primitive weapons, the Indus valley civilisation was into farming and arts. Over the years this country has been colonised, first by the Ottoman Turks and then the British. these invaders have left behind their legacy which the country is grappling with since Independence, 65yrs back. When you compare this with the likes of USA a 300yr old or UK a 400yr old democracy, it is not doing badly for a country of 1.2billion. In these 65yrs, India had to fight 3 wars with Pakistan and 1 with China, the US has its knickers in a twist fighting a proxy war with Pak. Add to this the cold war years when India had to depend on USSR for arms support which came at a cost. Large sections of our society were influenced by the communist, India is the only democratic country with a sizeable communist party.
Hence what you see happening in India today are remnants of this history, the country is evolving and very fast. The Israelis, Yanks, Brits, Scandanavians all of them have boosted their economy on the back of massive state investment, the IT sector in India is completely indigenius and independent of state investment. And on that count it is extremely competitive and profitable for the ROI. There is massive corruption in this country at the moment but the good thing is that it is being challenged and all sections of civil society are kicking in to check it. The west did not evolve overnight, The scandinavians did not create a Egalitarian society once they put their horn hats and clubs down, it took time. Fortunately in the case of India due to technology, media and a growing literate society this change will be rather sooner. The present AI drama is evidence of how the old guard is slowing losing its powers, previously they would have stopped any more addition of aircrafts by others, till AI did not get their new toys.

The implementation of these policies are evidence of acceptance on the way forward. Personally i do not believe the country needed FDI in aviation. The country needs more entrepreneur friendly aviation policies i.e Lower fuel prices and doing away with the Intl flts rule. Support services in MRO, Airports will follow growth. If the retail sector takes off in India, there is potential for small and medium sized air freight operators, this will encourage many youngsters to take up aviation creating a greater pool of manpower, as it happens in EU or US.

There will be a few hick-ups on the way but the writing is on the wall for all the political parties the country needs growth and its these policies which will deliver it. I think congress would rather go into elections with the credit for being progressive, though the charges of corruption won't wash off soon, the other parties will split the anti-congress vote to the glee of congress, if elections are held this year.

Quoting yowza (Reply 5): I don't really see how this changes anything. At the end of the the day, the decision-making ownership percentage remains outside the control of foreign investors/carriers so why take the risk?

And that might just impact the ROI analysis...  

Quoting comorin (Reply 13): They could go into a per-packaged receivership and the creditors may find a price attractive to all. I wonder what Mallya's end game is; he has been waiting for this day a long time.

IT has a debt so out of proportion with its value that I just do not see an end game. If this had happened two years ago? Sure. Not today.

Quoting aeroblogger (Reply 17): Quoting lightsaber (Reply 12): But this could be big shot for 9W. Doubtful. The current investors in 9W wouldn't like that too much.

Ok. But 9W needs cash. At some point good investors think ROI and not much else. Unless they want to dump a bunch of money into 9W. The reality is that the GoI has allowed AI to continue. This has not only ensured the end of IT, but has hurt 9W financially.

It seems like the only healthy Indian airline is 6E. What is their investment structure? With a 49% 'infusion,' they could really expand quickly.  

Lightsaber

Quoting tayaramecanici (Reply 24): Why is it that Indians are very successful outside of India (JLR, Arcellor Mittal etc) and make up the largest non-caucasian race among the progressive communities in the west

Uhm - you do realise that Indians are caucasian? There is a reason why the languages of India & Europe are called 'Indo-European' - its because they are related (e.g. Sanskrit and Latin both had common roots)

And the Ottoman Turks never colonised India. The Moghuls did, but they weren't Ottoman.

Quoting Lutfi (Reply 26): The Moghuls did, but they weren't Ottoman.

You are right. Mughals were direct descendents of the Turks (not Ottomans) and the Mongols. The first Mughal emperor Babur was Mongol from his mothers side (Chengiz khan lineage) and Turk from his fathers side (Timur Lane lineage).

Quoting comorin (Reply 1): To clarify further, the cabinet decided that Foreign Carriers are now allowed to take up to a 49% stake in Indian domestic airlines. The Hindu clears it up:

The full release from the Govt of India is here.

The important thing to realise is that FDI is not under the automatic route. If has to be approved by the Ministry of Civil Aviation and then will go to the FIPB for approval. No guesses why.  

To be honest I don´t see why any foreign airline would invest in an Indian airline. The domestic market is highly competitive and not really profitable (AFAIK they´re syill loss making). The foreign markets are also highly competitive. Thus, why would one invest in an Indian airline. Better to have one in you alliance and don´t have the financial burden of loss making enterprise.

When you have 49% control, how can you get a majority vote ? This is same type of deal that many countries given in their aviation section, and in my opinion is generous. However with a 49% vote you can still block some critical decisions, especially if there are more than one Indian owner.

This is as good as it can get. May be too late for KF, but other carriers can benefit.

I cannot imagine any international company biting on this in india. The potential liabilities are endless.

Union Carbide once went in on a 49% partnership with 51% in local Indian control. Built to Union Carbide standards, initially staffed and maintained to their standards as well.

However, after a number of years the plant was not profitable; and the local company could make the plant profitable by cutting the trained staff and not following the procedures - and by changing production methods.

The local government also allowed people to reside within a distance that Union Carbide said up front needed to be a clearance zone from the plant.

So, with the 51% in control local company having an under-trained staff, not following procedures, with the safety equipment necessary to contain a run away reaction in the process tanks out of service - and with a lot of people living just outside the fence.... is it any wonder that a disaster happened.

Of course, according to the people from India it was all Union Carbides fault (even though their audits documented that the local company did not have adequately trained staff and were not following procedures). Union Carbide could not shut the plant down as they only had 49% control - and the local company was not going to shut the plant down while they could make a profit.

So tell me again how many companies will be interested in a 49% share of any company in India - especially one where hundreds of people could get killed. Who would be held liable by the Indian government and courts?

Have a great day,

  
Here I was thinking that the USA was the only civilized nation who did not allow foreign ownership of greater than 50% of their domestic carriers  

Major issue as some have already mentioned would be how much say would the foreign investor have over operations, no one coming in to underwrite the massive debts that the locals have piled up will do so without being able to implement major changes, first of which will be to weed out bad management and employees.

Quoting 2175301 (Reply 31): So tell me again how many companies will be interested in a 49% share of any company in India - especially one where hundreds of people could get killed. Who would be held liable by the Indian government and courts?

There must be well over 200 American, Canadian and West European companies operating in India under various restrictions depending on the specific industry type.......nothing stopped them from being there.....some American and European companies have been around for so long that a lot of Indian's don't even know that they're multinationals   .

Quoting hohd (Reply 30): When you have 49% control, how can you get a majority vote ?

Simple. You get a sympathetic Indian citizen to hold another 1.01% to get 50.1% control, or even more. Till 1991, foreign companies were not allowed to own more than 40% of the Indian subsidiary. Yet MNCs like Bosch, SKF, Widia, Sandvik, and a whole host of others ran their Indian subsidiaries with complete control. The MNC would ensure ownership of 10.1% (at least) in the same way.

Quoting par13del (Reply 32): Here I was thinking that the USA was the only civilized nation who did not allow foreign ownership of greater than 50% of their domestic carriers

If I remember, US does not allow more than 25% foreign ownership, but I may be wrong.

I really don't think a minority investor will actually be at the mercy of the majority owners. For one thing, they only have to be screwed once to pull out. If an airline has proven to be a bad investment by one airline, it is unlikely that another airline will step up with cash.

A reasonable amount of control will be an integral part of any investment plan. Billions of dollars they would otherwise see is a pretty strong incentive to play straight.

Quoting BLRAviation (Reply 34): Quoting par13del (Reply 32): Here I was thinking that the USA was the only civilized nation who did not allow foreign ownership of greater than 50% of their domestic carriers If I remember, US does not allow more than 25% foreign ownership, but I may be wrong.

That's correct. It's also 25% in Canada. In Brazil it's 20%. The Brazilian government proposed to increase it to 49% a couple of years ago but I don't think the change has been implemented yet.

Quoting par13del (Reply 32): Here I was thinking that the USA was the only civilized nation who did not allow foreign ownership of greater than 50% of their domestic carriers

Very few nations (civilized or not) allow foreign ownership greater than 50% for any of their carriers, not even those civilized EU nations  

Quoting Polot (Reply 37): Quoting par13del (Reply 32): Here I was thinking that the USA was the only civilized nation who did not allow foreign ownership of greater than 50% of their domestic carriers Very few nations (civilized or not) allow foreign ownership greater than 50% for any of their carriers, not even those civilized EU nations

Chile has no foreign ownership restrictions on both domestic and international airlines. Australia and New Zealand have no restrictions on domestic carriers (49% on international carriers unless that's changed recently).

LX is 100% owned by LH. Switzerland had to renegotiate all their international bilaterals once LH's ownership share went beyond 49%. Bilaterals usually usually contain a 49% limit, with rare exceptions such as the EU single market where any EU-based airline can fly anywhere within the EU, and own 100% of any other EU-based carriers.

Quoting Viscount724 (Reply 38): Bilaterals usually usually contain a 49% limit, with rare exceptions such as the EU single market where any EU-based airline can fly anywhere within the EU, and own 100% of any other EU-based carriers.

Yes, but that is only true if you are based in an EU country. If you are not based in the EU (lets say you are a certain carrier based in I don't know, the UAE) good look acquiring more than 49% of an EU airline. I specifically mentioned the EU because I knew that if I didn't someone would come here pointing out LX or SN or whatnot (and I realize that you were not saying that anybody can own EU carriers).

Quoting Lutfi (Reply 26): Uhm - you do realise that Indians are caucasian? There is a reason why the languages of India & Europe are called 'Indo-European' - its because they are related (e.g. Sanskrit and Latin both had common roots) And the Ottoman Turks never colonised India. The Moghuls did, but they weren't Ottoman.

North Indians are of Aryan origin, this term is considered a taboo after the 3rd R. Ottoman turks planted their seeds into the rest, Chengiz took the dictat on fertilisation too seriously with incredible results. Anyways these Moghuls brought their culture, like the EU Missionaries who followed, now they have the problems of mass immigration in India   

Quoting BLRAviation (Reply 34): Simple. You get a sympathetic Indian citizen to hold another 1.01% to get 50.1% control, or even more.

If you have a look at the Management of 9W, you will find a Malaysian gentleman of Indian origin there. He is not been nominated for his brilliant aviation management skills...............your guess is as good as mine.

Quoting yowza (Reply 5): I don't really see how this changes anything. At the end of the the day, the decision-making ownership percentage remains outside the control of foreign investors/carriers so why take the risk? Let's not forget that the Indian government has been less than sane, predictable, and consistent in terms of transport (and in particular aviation) policy. This is not even mentioning that they own AI... a huge potential for fireworks.

Investing in Indian airlines would be a huge gamble. The only way it wouldn't would be the government of India making it very clear that investors have a strong say in how the airlines are run. I'm not sure that would happen, but it's the only way India's airlines are going to survive.

Quoting tayaramecanici (Reply 40): If you have a look at the Management of 9W, you will find a Malaysian gentleman of Indian origin there. He is not been nominated for his brilliant aviation management skills...............your guess is as good as mine.

In the case of 9W all their foreign investment is routed via the Channel Islands (so non traceable) and in the name of Mr. Naresh Goyal. But you are correct in the concept. How else would the foreign carrier meet the 75% Directors from India dictat.

The newspapers today had an article of how it would take the law and finance ministry a "few months" to finalise all the rules. I guess the squeaky wheels get the grease.  

Quoting ebj1248650 (Reply 41): Investing in Indian airlines would be a huge gamble. The only way it wouldn't would be the government of India making it very clear that investors have a strong say in how the airlines are run. I'm not sure that would happen, but it's the only way India's airlines are going to survive.

The politicians and bureaucrats look at the aviation sector as the preserve of the "wealthy" and "luxurious" and hence something to tap for fleecing funds. Officially and otherwise.

I do not see any substantive changes in the way the Ministry controls all aspects of civil aviation in India, including the private carriers. I think, the Ministry feels the access to the large Indian market will override such fears from investors.

Quoting BLRAviation (Reply 42): I think, the Ministry feels the access to the large Indian market will override such fears from investors.

You might be right, but the potential crippling affect would come if the Ministry limits how much access it will give to investor airlines. And the access limits may not surface until after the investors have committed their money. It would seem that there needs to be a change of attitude and business model on Indian airlines parts before making a big investment from the outside would make good sense.

Interesting tidbit for 9W:


Jet Airways (India) Ltd. (JETIN), the nation’s biggest, fell 2.2 percent. The carrier isn’t eligible to win overseas funds as its founder’s 80 percent holding, routed through overseas entities, is already deemed as foreign investment, JPMorgan Chase & Co. said in a report.

I find that an interesting twist.
http://www.bloomberg.com/news/2012-0...ain-most-from-new-owner-rules.html

The other bits are that only Spicejet really is in a position to benefit from this law.

Lightsaber

Not anything new... As I've said many times, the private airlines of India are funded almost completely by black money, which, in the case of 9W, is routed in as FDI in order to make it non-traceable.

In SpiceJet's case, the black money (Aircel-Maxis) was routed through Sun Group, an Indian company, so they are still eligible to take advantage of this opportunity...

For those of you wondering the history behind FDI being permitted by all entities except foreign airlines, Naresh Goyal himself was the biggest proponent of this policy. Probably so that he could route money in internationally, but not have to deal with competitors who are funded by a foreign airline...

[Edited 2012-09-17 13:45:28]

Quoting BLRAviation (Reply 42): The politicians and bureaucrats look at the aviation sector as the preserve of the "wealthy" and "luxurious" and hence something to tap for fleecing funds. Officially and otherwise.

It comes from the indian mindset of promoting ''Daridra Narayan'', at every moment in the last couple of hundred years of India's history its the underdog who has been promoted. However, i remember during the last stages of the NDA rule Advani making a comment on the change in mindset among the ruling elite where they had started to look at the perceived ''Luxury'' as a necessity. The growth in Car ownership is evidence of this.

Let us hope the FDI in retail will survive and eventually start moving forward, Air Freight will be the first benefactor of this move as the mega retailers start moving huge quantities of perishables, just in time. Smaller cities will see a growth on the back of this move, including secondary airports with local district administration/politicians viewing an opportunity to turn around a redundant airstrip for economic benefit - personal or community.

Quoting lightsaber (Reply 44): Jet Airways (India) Ltd. (JETIN), the nation’s biggest, fell 2.2 percent. The carrier isn’t eligible to win overseas funds as its founder’s 80 percent holding, routed through overseas entities, is already deemed as foreign investment, JPMorgan Chase & Co. said in a report.

The way crony politics works in India, JET will now face increasing demands for declaring its investors. The money coming thru the new FDI will be made public but JET will face increasing criticism on its share holding......The boot now changes legs, enjoy.

Quoting ebj1248650 (Reply 41): Investing in Indian airlines would be a huge gamble.

And like in all gambles if the investment can be written off, the returns are huge. In the next 15yrs nearly 200million Indians will be turning out of colleges. A good % of these will end up working in the western world and far-east supporting their ageing economies.
You will be surprised to know that the largest Indian tourists come from the state of West Bengal in india, the chief of this state has been the biggest impediment of growth in India and she is beginning to see the light. Charter Airlines are a natural home for this state, additionally you will be surprised to know that the only 2 airline execs of Indian origin in USA come from this state, Rono dutta and Rakesh gangwal. Rono tried to run Sahara unsuccessfully but sold a insolvent S2 to JET for a decent price. Rakesh is the brain and money behind Indigo.
India has the best fundamentals for Aviation in Asia, the Govt has to inevitably realise this to leverage on it.

Quoting aeroblogger (Reply 45): Not anything new... As I've said many times, the private airlines of India are funded almost completely by black money, which, in the case of 9W, is routed in as FDI in order to make it non-traceable.

Rohit, I would not go so drastic, but yes, it is safe to say there is a lot of cash involved, and there are high possibilities that part of it may not be declared.

Routing ill gotten gains via tax-havens in the form of FDI is reasonably common.

Until this can be proven, it is really just speculation. What is clear however, is that none of this, if even true, can compare with the billions in dollars in bailouts given to Air India by the tax payers of India. Of course this does not include the effectively larger amounts given in the form of loan guarantees that allow it to get loans substantially below commercial rates.

Quoting aeroblogger (Reply 45): Not anything new... As I've said many times, the private airlines of India are funded almost completely by black money, which, in the case of 9W, is routed in as FDI in order to make it non-traceable. In SpiceJet's case, the black money (Aircel-Maxis) was routed through Sun Group, an Indian company, so they are still eligible to take advantage of this opportunity... For those of you wondering the history behind FDI being permitted by all entities except foreign airlines, Naresh Goyal himself was the biggest proponent of this policy. Probably so that he could route money in internationally, but not have to deal with competitors who are funded by a foreign airline...

Quoting tayaramecanici (Reply 46): the chief of this state has been the biggest impediment of growth in India and she is beginning to see the light

Spoke too sun buddy. Shes thrown the spanner yet again. But i guess she will get the boot this time. UPA may be able to push the reforms with Karuna, Maya and Mulayam by their side.