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Rediff.com  » Business » Branson can invest in airlines: Govt

Branson can invest in airlines: Govt

November 30, 2004 10:21 IST

The government on Monday said Virgin Group chairman Richard Branson could invest in private carriers in his personal capacity. This opens the way for the British billionaire to start negotiations with domestic airlines.

The present norms do not allow international carriers to invest in Indian airlines, but permits other corporate bodies to invest up to 49 per cent in the equity of a domestic carrier.

Branson, who was in India last week, had said he would invest in domestic carriers in his personal capacity because he needed to be in the Indian market, which is growing at over 25 per cent annually.

Branson also said he was in talks with at least two Indian carriers, including low-cost carrier Air Deccan.

"Branson can invest in his personal capacity. We will only have to look at the investment route," said Ajai Prasad, secretary, civil aviation ministry.

Air Deccan was in talks with Branson's Virgin Blue for raising funds. But the talks were called off because of the restrictive norms.

Air Deccan said the carrier was open to negotiations with Branson, if the present norms allowed it. "If the law permits, we are open to further negotiations," said GR Gopinath, managing director, Deccan Aviation, which runs the low-cost carrier.

Subsequent to calling off talks with Virgin Blue, Air Deccan has now shortlisted 2-3 investors for a private placement to raise about Rs 200 crore (Rs 2 billion).

According to Prasad, the government will examine issues like the routing of investment and the source of funds. Besides, the government will also not permit any control by other airlines run by him in the Indian venture.

Aviation industry experts are of the view that Branson can exploit the fact that the present norms are silent on foreign individuals investing in Indian carriers.

"We are in talks with existing domestic airlines and also those who want to enter the airline business. We will be happy to take 25 per cent or 49 per cent. We have quite good expertise in running domestic carriers," Branson had said last week.

Asked if he would resume the codeshare arrangement with Air-India if he failed to get bilateral air traffic rights for Indian operations, Branson had said 42 flights would now operate on the India-UK sector.

"We have already applied for seven flights each to Mumbai and Delhi and some to Bangalore out of the new rights granted by the Indian government," he said.

He said he would move the British government also to get an equitable share in the Indian market, which was now dominated by Virgin's competitor British Airways.

Additional flights between India and the UK will help push fares down and get more people to travel.

Virgin, which started its operations in the country through a codesharing agreement with Air-India in July 2000, has now increased its flights on the Delhi-London sector from two to three.

Branson is visiting India to attend a programme of the Loomba Trust of the UK, which is a charity that supports disadvantaged children. Virgin is the first corporate sponsor of the trust.

Branson also wants to branch out into the telecom sector in India. He said the Virgin Group had started discussions with some Indian companies.

"We will be glad to have a licence of our own," he said.
BS Corporate Bureau in New Delhi
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