Etihad’s potential investment in Jet Airways to be a game-changer for India

Jet Airways is expected to be the first incumbent airline to take advantage of the Sep-2012 decision by the Indian Cabinet to permit up to 49% foreign investment in Indian airlines.

Allowing foreign airline investment is a vital step in establishing a more professional and corporatised sector in India. It offers the promise not only of introducing strategic capital and expertise into the market, but also delivers a much needed confidence factor for other institutional funding.

However, a big drawback remains the weakness of India's underlying regulatory framework and the structural challenges in Indian aviation. Until a host of typically Indian nit-picking bureaucratic and political issues are squared away, it remains a lottery investing into the country. That is a fundamental issue for any government serious about encouraging measures to generate consumer (and corporate) benefits.