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Singapore Airlines to keep options open on disinvestment of Air India

13 January 2018

In a move that beckoned the BJP government's strong FDI reform drive, the cabinet yesterday permitted foreign airlines to own up to 49 percent stake in India's national carrier-Air India at a time when the process for strategic disinvestment of the airline is in the pipeline. "However, we will keep our options open with respect to the proposed disinvestment of Air India", Singapore Airlines said in an e-mailed statement to the PTI, in response to a query on whether the Singapore-traded company will bid for AI.

This format is followed by both Tata Sons' joint venture airlines, where Singapore Airlines has a 49% stake in Vistara and AirAsia a 49% stake in AirAsia India. In addition to this, Singapore Airlines group has significant number of flights connecting various Indian cities. Doha-based Qatar Airways has long wanted to invest in IndiGo and more recently shown interest in having a domestic airline in India.

The cabinet chaired by Prime Minister Narendra Modi gave its nod to several amendments in the FDI policy, including foreign investments in Air India under the approval route, which is subject to certain conditions.

The existing policy allowing foreign airlines are to invest in the capital of Indian airlines, except for Air India, up to a limit of 49% of their paid-up capital but has now been tweaked to accommodate this impending deal.

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On whether it would be interested in Air India disinvestment, Emirates said it has no plans to buy or acquire any airline.

Wednesday's move paves the way for Indian players to tie up with foreign airlines as the substantial ownership and effective control (SOEC) clause will still be applicable on the national carrier which means that foreign carriers would be able to bid for Air India only if they partner with an Indian airline.

He also highlighted the fact that "despite such reckless and imprudent misadventure", Air India has struggled to come back to operating profit for last three years.

Singapore Airlines to keep options open on disinvestment of Air India