Virgin knocks on India's door

Virgin Blue has urged the Indian Government to open up its domestic airlines to investment by foreign carriers and says the massive South Asian market is a potential target for its new business development unit.
The Australian carrier has made no secret of the fact it is keen to develop an Asian low-cost carrier. It revealed in April that it had held talks with several Asian airlines.
Qantas has already taken the plunge with a $40 million deal to take a 49.9 per cent stake in a Singapore-based carrier with Temasek Holdings and two Singaporean businessmen.
Virgin indicated yesterday it was prepared to cast its net wider than South-East Asia and wanted India on its list of potential opportunities.
“As we said at our results, we’ve started a business development unit to look at a wide variety of opportunities,” Virgin head of strategy David Huttner said from a Centre for Asia-Pacific Aviation symposium in New Delhi.
“One of the things we are considering is an investment in Asia.
“Right now, India has been excluded from these opportunities because of legislation barring foreign airline investment in the domestic aviation sector,” Mr Huttner said.
“The Government is presently reconsidering this position and we are certainly encouraging it to open up the market to foreign investors so Indian consumers and the Indian economy can achieve the same stimulus that has occurred everywhere else in the world where low-cost carriers have started.”
India and China are seen as two of the big growth opportunities in the region, but there has been scepticism about whether India would be able to throw off the shackles of government control.
While India allows foreign direct investment in an airline, it is capped at 26 per cent and foreign carriers are barred.
But CAPA managing director Peter Harbison believes the changes already being wrought by low-cost airlines are forcing changes in the Government’s attitude.
“The initial response from many in the industry is that it can’t happen here. India is different,” Mr Harbison said.
“Six months ago, that is exactly what they were saying in South-East Asia. Three months ago that is what they were saying in North Asia.
“You will be astonished at how fast people change their minds.”
Mr Harbison pointed to recent announcements about Indian low-cost carriers Air India Express, Alliance Air and Kingfisher as well as interest in fundraising by another low-cost carrier, Air Deccan.
“The movement is creating huge new investment opportunities in airline start-ups and restructuring older airlines,” he said.