India Liberalizes Aircraft-Import Rules: WSJ

Updated March 21, 2013, 9:32 a.m. ET

By SANTANU CHOUDHURY
The Wall Street Journal
 
NEW DELHI--India's existing airlines as well as private aircraft owners and flight training institutes no longer need federal government approval to import planes, Civil Aviation Minister Ajit Singh said Thursday.

The move will be a relief to airlines such as Jet Airways (India) Ltd., SpiceJet Ltd. and InterGlobe Aviation Ltd.'s budget carrier IndiGo which until now needed to get their aircraft purchase plans cleared by a panel of bureaucrats from the aviation ministry and also by the minister himself.

Aircraft from Jet Airways and Air India at Indira Gandhi International Airport in New Delhi on Sept. 8, 2012.

These companies will now need only get approval from the Directorate General of Civil Aviation, the sector regulator, a government statement said.

New airlines and aircraft importers will require federal no-objection certificates for flights and initial import approvals, it added.

"The decision is another major step toward liberalization in the civil-aviation sector after allowing 49% foreign-direct investment in airlines," the statement said. It will "remove duplication [of procedures] and also reduce delays in seeking approval and will do away with the cumbersome procedure which airlines have to follow before acquisition of aircraft," it added.

The Indian government last September permitted foreign carriers to buy stakes of up to 49% in local airlines. Before that only foreign investors, and not airlines, were permitted to invest in Indian carriers.

The requirement for airlines to seek the ministry's permission to add new planes was part of a strategy to regulate aircraft imports to prevent addition of excessive seat capacity by bigger airlines and also to hold off any fare wars which could hurt smaller airlines more.

In addition to cutthroat competition, airlines in India have been hurt by high operational and finance costs and, lately, a drop in passenger traffic. Several of India's carriers are loss-making, although the biggest low-fare carrier, IndiGo, is profitable. SpiceJet Ltd. and Jet Airways swung to a net profit in the quarter ended Dec. 31.

The airlines had argued for letting them import as many planes as they required so that they could plan on expanding their capacities in advance and boost air connectivity in the country.

The ministry had approved imports of 97 planes--including 33 by Jet Airways, 15 by SpiceJet and 35 by IndiGo--by airlines and other aircraft operators since December 2011, the statement said.

Also, flight training institutes have been given permission to import eight planes, while acquisition of five aircraft for private use has also been approved, it said.

Source:  http://online.wsj.com