Just when India's beleaguered airlines though it was safe to plan for the future, another government has fallen by the wayside and left the airlines wondering what fate holds in store for them next.

Some four reports by special committees on domestic Indian Airlines, national flag Air India, aviation policy and airports policy have either been completed or are nearing completion and awaiting urgent clearance from the State.

The reports may be ready, but there is no-one in the government to sign them off. With the toppling of the fragile coalition government of Prime Minister I K Gujral in December 1997, the troubled airline industry must wait for a clear direction until February, the earliest a new election is likely to take place.

Time is not a luxury which India's two state-owned airlines, Indian Airlines and Air India, can afford. The carriers urgently need clearance for recovery plans recommended by the Kelkar Committee, India's equivalent of the Group of Wise Men. Dr Vijay Kelkar, secretary of the Ministry of Petroleum and a respected economist, has been tasked by the government to develop and prioritise strategies to turn around the two loss-making airlines.

The Kelkar committee's main recommendation is a rescue package of US$230 million for mainly domestic carrier Indian Airlines. At presstime Kelkar and his committee, which includes the joint chairman of Air India and Indian Airlines, P C Sen, were finalising a report on Air India.

Sen refuses to give any indication of what the Air India report is likely to suggest. However, the industry expects the report to push for a sweeping rationalisation of the flag's operations, network adjustments and possibly some form of financial assistance to help Air India lever itself back into a stronger operating position.

Shortly before its demise, the former government was also handed a new draft airport infrastructure policy, the result of a Civil Aviation Department investigation. The policy pushes for clearance for foreign investors, including offshore airport operators, to have automatic rights for 75 per cent equity in Indian airport development.

The policy also recommends that foreign interests be given the go-ahead to own 100 per cent of Indian airport facilities, on a case by case basis. The recommendation is designed to pull in foreign capital to fund a much needed modernisation of the nation's airport system.

Meanwhile, India's new aviation policy is also nearing completion. Sources say that the policy confirms that foreign airlines won't be permitted to own a stake in Indian carriers. If the foreign ownership restriction takes effect, it will put an end to Singapore Airlines' hopes for a new domestic joint venture with India's giant Tata Industries conglomerate.

Not content with simply barring foreign ownership, the new aviation policy is understood to take foreign restrictions one step further. The policy also threatens to bar foreign carriers from offering any technical or operational assistance to startup Indian airlines. The driving force behind this measure was civil aviation minister C M Ibrahim, who was bent on protecting existing Indian operators from foreign influenced competition.

While all the reports were expected to gain government approval or otherwise by January or February this year, analysts now predict that decisions are likely to be delayed by months while the new government settles in and decides its policy directions.

Tom Ballantyne

Source: Airline Business