British Airways Eyes India Tie-Up

Business Standard:

UK flag carrier British Airways (BA) plans to tie up with an Indian domestic carrier in a franchise partnership.

If the move comes through, it would pave the way for international carriers to extend their networks within India, without having to make an investment. Current foreign direct investment (FDI) policy does not allow foreign carriers to hold equity, directly or indirectly, in domestic airlines.

The franchise model that BA — Europe’s third-largest carrier — follows globally involves no FDI but allows the franchisee (domestic airline) to use its livery, brand and code, apart from providing management expertise.

BA is believed to be in discussions with several domestic airlines, Wadia-owned Go Air among them.

Confirming that BA has been looking at such franchise agreements in India, Civil Aviation Secretary Ashok Chawla said: “So long as it is not surrogate cabotage we do not have any problem with franchising.”

Airline cabotage refers to the carriage of air traffic that originates and terminates within the boundaries of a given country by an air carrier of another country. Rights to such traffic are usually entirely denied or severely restricted.

The government currently does not have guidelines on franchise arrangements, so, Chawla said a senior ministry official would meet BA executives on September 15 to understand the business plan.

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