BERLIN (March 8): Qatar Airways Ltd plans to set up an Indian airline with a fleet of 100 planes, renewing a push to gain a bigger share of one of the world’s fastest growing travel markets.
The Gulf carrier will make an application to the Indian authorities “soon,” Chief Executive Officer Akbar Al Baker said Wednesday at the ITB Berlin travel fair, adding that he intends to proceed “step by step.”
Qatar Air was thwarted in a 2015 bid to boost its Indian footprint by purchasing a stake in discount specialist Indigo and failed to buy up shares piecemeal during and after a subsequent initial public offering. While the Indian government limits overseas airlines to 49% stakes in its carriers, a relaxation of restrictions last year means foreign sovereign wealth funds and portfolio investors can potentially acquire 100% holdings.
The India plan won’t involve a joint venture, Al Baker said, adding that he intends to respond to the country’s “very progressive” moves toward allowing foreign investment, without specifying how his company would get round the limitations on outside airlines.
Qatar Air has been actively extending its global reach. It currently owns 20% of British Airways parent IAG SA, 10% of South America’s biggest carrier Latam Airlines Group SA and 49% of Italy’s Meridiana SpA. The Doha-based company also wants to start a domestic airline in Saudi Arabia, though a license has been delayed for years, prompting it to deploy jets elsewhere.
Etihad Stake
Al Baker is targeting an Indian foothold after Gulf rival Etihad Airways of Abu Dhabi took a 24% stake in Jet Airways India Ltd. Leading Asian carriers Singapore Airlines Ltd and AirAsia Bhd to also grab 49% holdings in their affiliates in the subcontinent.
It’s possible that Al Baker may turn to the Qatar Investment Authority in renewing his interest in India, though the sovereign wealth fund was unable to secure a position in Indigo during its IPO after failing to gain the necessary approvals in time.
Al Baker said Qatar Air is short of 10 Airbus Group SE A350 and A320 jets following program delays, including five A320neos he cancelled in response to engine-cooling issues that would have limited their operations. Some of the narrow-body orders will now be converted into larger A321neos.
The aircraft shortfall means Qatar Air has had to shelve the opening of eight new routes, the CEO said, while adding that it will carry on growing at a “double-digit” pace. Airbus spokesman Stefan Schaffrath said in Berlin that the manufacturer is continuing to work to satisfy Al Baker’s demands.
Asked whether US rivals might succeed in persuading Donald Trump to curb the expansion of Gulf carriers amid allegations of unfair state support, Al Baker said he was confident that the president’s business background would favour increased competition.
“The US is a capitalist country,” he said.