New Delhi: India's second-largest budget carrier SpiceJet Ltd's Chief Executive Officer Neil Mills Wednesday said that foreign airlines like Emirates, Air Asia and British Airways have not denied their interest to pick up stake in the company in particular, but have decided against investing in the entire domestic aviation sector.
"The managements of these three companies have said that the risk reward ratio currently does not merit an investment in a domestic Indian carrier," Mills told CNBC TV18.
However, the foreign airlines are keen to acquire stake in SpiceJet, if the government opens foreign direct investment (FDI) doors to international carriers, he said without naming any one of the foreign companies.
Earlier, media reports had said that SpiceJet was negotiating with Dubai-based Emirates for sale of a controlling stake in the airline, buffeted by fierce market competition and high jet fuel costs.
The aviation ministry has already floated a note to the Cabinet on allowing foreign carriers to acquire 49% stake in domestic airlines.
The move, if approved, will turn out to be a boon for India's embattled domestic airlines.
Currently, up to 49% FDI is permitted in domestic carriers by non-airline foreign companies or 100% by NRIs (non-resident Indians), but foreign airlines are barred from investing directly or indirectly in Indian airlines, primarily on security grounds.
Besides, SpiceJet is in talks with two foreign private equity (PE) players and may soon sign a term sheet with one of the them, Mills said.
He further said that the company has already received clearance from the Directorate General of Foreign Trade (DGFT) for direct imports of aviation turbine fuel (ATF) and expects to receive the first shipment before July-end.
Earlier last week, news agency IANS, citing an unidentified Air India official, said the ailing carrier would seek DGFT's approval for direct import of ATF, which would help the carrier save nearly Rs 3 billion per year.
In India, ATF is sold at around 50%-60% higher price as compared to the international markets such as Bangkok, Singapore or Dubai and domestic airlines pay sales tax over it in the range of 4%-28%.
An Empowered Group of Ministers (EgoM) approved direct import of ATF by the airlines in February this year.
Shares of SpiceJet closed at Rs 33.6, up 1.97%, on the Bombay Stock Exchange today.
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