Thursday, March 09, 2017

As the skies above India rain money, Qatar Airways lines up a domestic airline

Qatar Airways is taxiing for takeoff in India. Just three months after Qatari prime minister Sheikh Abdullah bin Nasser bin Khalifa Al Thani held talks in New Delhi, the state-owned carrier of the oil-rich middle eastern nation has announced plans to enter India’s aviation market.
“Yes, we will have a 100% owned domestic carrier in India that will belong to both the QR (Qatar Airways) and our state investment arm, as India has now allowed foreign direct investment in domestic carriers within India,” Qatar Airways CEO Akbar Al Baker said at ITB Berlin, a tourism trade fair, on March 08. “We will soon be making an application to that effect, and from there we will proceed.”
Last June, the Narendra Modi government allowed foreign investors, except foreign airlines, to hold a 100% stake in domestic carriers. Foreign airlines cannot invest over 49% of their paid-up capital in Indian carriers. This means the Qatar Investment Authority, the state-run wealth fund, can potentially own the Indian venture.
If the application comes through, Qatar will become the third global airline to set up shop in India in recent years, following Air Asia’s entry in 2014 and Singapore Airlines’ in 2015. Both carriers entered India through joint ventures with the Tata group. Etihad Airways, a regional rival of Qatar, has held a 24% stake in Jet Airways since 2013.
Qatar’s proposed short-haul airline in India will operate on the back of 100 narrow-body planes, Bloomberg reported, which would make it one of the largest fleets in the subcontinent. Jet Airways has a fleet size of 112 aircraft, state-owned Air India 118, and IndiGo 129.
Qatar’s entry into India’s $16-billion aviation market comes at a time when the country’s domestic airlines are finally seeing some recovery after years of gloom. Between 2011 and 2015, barring IndiGo and GoAir, none of India’s seven airlines made any profits. In fact, two airlines—Kingfisher and Paramount—went bust during that time, even as another domestic carrier, SpiceJet, was on the verge of closing down.
09/03/17 Reuters/Pascal Rossignol/Quartz Media