Home / Travel / Tourism/ Qatar Airways rethinks Indian plans due to foreign ownership rules

Qatar Airways rethinks Indian plans due to foreign ownership rules


Comments / {{hitsCtrl.values.hits}} Views / Thursday, 6 September 2018 00:00


 

NEW DELHI (Reuters): Qatar Airways is reviewing plans for its own domestic Indian airline due to “confusing” foreign ownership rules and could work with a partner in India or take a stake in IndiGo instead, its chief executive said on Tuesday.

The state-owned Gulf carrier has long coveted the Indian aviation market, which is the fastest growing in the world, and in 2017 said it would set up a domestic airline, a year after India eased foreign investment rules for the sector.

“We are really very interested to launch an airline in India, but the regulation is a little bit confusing to us,” Qatar Airways CEO Akbar al-Baker told reporters in New Delhi.

India now allows 100% ownership of India-based airlines, up from 49% , but only with government approval. Meanwhile, foreign airlines continue to be limited to 49% ownership.

Qatar Airways planned to own a minority stake of the domestic airline with sovereign wealth fund Qatar Investment Authority (QIA) being the majority owner.

However, enquiries to start the application process in India were rejected over QIA’s ownership of Qatar Airways, Baker said.

“We really don’t know what is allowed,” he said. Qatar Airways could now work with an Indian partner for the domestic airline or alternatively seek a 15 to 25% stake in low cost airline IndiGo. If both of those failed then the airline would have to forget about the domestic market, Baker said.

Qatar Airways has been interested in investing in IndiGo for several years, though never bought into the airline.

Qatar Airways would be interested in buying Air India which the government wants to sell a 76 percent stake in, Baker said, adding it would only want the core airline assets and not other parts of the business such as ground handling services. Any bid for Air India would be dependent on working with a strong Indian partner, Baker said, adding that the airline’s debt was not an issue. India wants to offload about $5.1 billion of Air India’s debt.

“The (Air India) debt can be taken and restructured. The issue is with whom we will partner.” Qatar Airways expects to release its annual results in two weeks time, Baker said. He has previously said the airline made a “substantial” loss, which it blamed on a regional dispute that has banned the airline from four Arab countries.


 

Indian airline losses could reach $1.9 billion this year

NEW DELHI (Reuters): Indian airlines are expected to post combined losses of up to $1.9 billion this financial year led by full-service carriers like Air India and Jet Airways driven by rising costs and low air fares, aviation consulting firm CAPA India said.

The loss forecast for the 12 months ending March 31 is up from an estimated $430 million to $460 million sector-wide loss in January largely due to the depreciation of the rupee and a rise in oil prices, CAPA said in a report released on Monday evening.

Ticket prices have not risen to compensate for higher costs, and CAPA said with the exception of Interglobe Aviation Ltd.’s IndiGo, none of the airlines have strong enough balance sheets to comfortably withstand higher costs and lower yields.

“Most carriers are ill-equipped to withstand cyclical downturns,” CAPA said in the report. “Airlines have completely lost pricing power as a result of the rapid influx of capacity.”

India is the fastest-growing domestic aviation market in the world and carriers have placed orders for hundreds of new Airbus SE and Boeing Co jets.

But airlines have struggled to stay profitable despite filling nearly 90 percent of seats and seeing a more than doubling of domestic passenger numbers over the last four years.

India is one of the cheapest domestic airline markets in the world and promotions such as $50 one-way tickets on the two-hour flight from Mumbai to Delhi are easy to find.

CAPA estimated Indian airlines, including money-losing state-owned Air India Ltd., need an additional $3 billion of capital in the near term to shore up their balance sheets.

The government in June said it had failed to attract bidders for a 76 percent stake in the national carrier, which is dependent on hand-outs to keep operating.

Jet Airways (India) Ltd. last month reported a quarterly loss of 13.23 billion rupees ($185.79 million) and said it was seeking to cut costs, inject capital and monetise its frequent flyer program.

Budget carrier IndiGo, the country’s largest airline, in July reported its lowest quarterly profit in three years, with earnings down 97 percent due to rising fuel costs and foreign exchange losses.

 

 


Share This Article


DISCLAIMER:

1. All comments will be moderated by the Daily FT Web Editor.

2. Comments that are abusive, obscene, incendiary, defamatory or irrelevant will not be published.

3. We may remove hyperlinks within comments.

4. Kindly use a genuine email ID and provide your name.

5. Spamming the comments section under different user names may result in being blacklisted.

COMMENTS

Today's Columnists

Courting democracy; Housing disaster?

Thursday, 15 November 2018

A small step was taken by a sovereign court the day before yesterday. It was a giant leap for the supremacy of the Constitution over all three arms of government in a recently benighted Sri Lanka. As well as being the tangible proof of intra-governme


Sri Lanka’s Judiciary in its finest hour

Thursday, 15 November 2018

“We must never forget that the only real source of power we as judges can tap is the respect of the people” –Justice Thurgood Marshall


When scholars turn slayers of reason

Thursday, 15 November 2018

“… I think, that the intellectual is an individual endowed with a faculty of representing, embodying, articulating a message, a view, an attitude, philosophy or opinion to, as well as for, a public. And this role has an edge to it, and cannot be


A stable democracy is a prerequisite for the wellbeing of Sri Lankans

Thursday, 15 November 2018

In Sri Lanka, despite the complexity of overlapping policies, the slow pace in implementing economic policies has been of central concern in the past few years. The current political state in Sri Lanka poses a series of e


Columnists More