Global airlines wary of picking up stakes in Indian carriers

Discussion in 'Economy & Infrastructure' started by Blackwater, Jan 22, 2012.

  1. Blackwater

    Blackwater Veteran Member Veteran Member

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    While a few airlines like Qatar Airways and Air Asia evinced some interest, carriers like Virgin Atlantic, Lufthansa and Emirates said they were not interested even before the government formally notified changes in the aviation policy.

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    Several major international airlines seem to be wary of picking up stakes in the loss-making Indian carriers at this stage, even as the government plans to take steps to allow them to do so.

    Even before the government formally notified changes in the aviation policy that currently bars foreign carriers from investing in Indian airlines, officials and spokespersons of major international airlines have said they were not interested in investing in the Indian aviation market.

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    While a few airlines like Qatar Airways and Air Asia evinced some interest, carriers like Virgin Atlantic, Lufthansa and Emirates said they were not interested.

    "We are focused on growing our business out of Delhi to London Heathrow and New York and as such we are not interested in investing in India's domestic carriers," Edmond Rose, Director Commercial and Revenue Planning of Virgin Atlantic, said in a statement when asked whether they would like to invest in any Indian carrier.

    Emirates Senior Vice President Commercial Operations (West Asia and Indian Ocean) Majid Al Mualla said, "Emirates has no plans to acquire a stake in another airline in India or anywhere else. We are busy focusing on many aspects of our own growth including the launch of flights to five new destinations in as many months."

    Echoing similar views, a Lufthansa spokesperson said the airline currently has "no plans to take up equity stakes in any Indian airline. Our strategy to achieve a strong presence in India is working".

    A spokesperson of the International Airlines Group (IAG), the parent company of British Airways and Spanish carrier Iberia, said, "The process to allow foreign airlines to invest in Indian carriers has not yet been fully approved. So it would be wrong to speculate about IAG's interest in any Indian airlines at this stage."

    However, the IAG spokesperson said, "Our aim is to be a global airline group and we are pleased with any steps towards liberalisation of the aviation industry".

    Qatar Airways CEO Akbar Al Baker reportedly said that the climate for airlines to invest in India should be "conducive to proper business processes... We will not go to India just to be a partner. We are going to help them become more profitable, to get further investment, further capital, but then we also need to have returns".

    Al Baker was quoted in media reports as having said at a Bahrain Air Show briefing three days ago that any investment in India would also depend on the target carrier's cost structure and organisation.

    Kuala Lumpur-based Air Asia said it would examine all options, including setting up a subsidiary airline in India, rather than look at investing in an Indian carrier.

    Its CEO Tony Fernandes said, "Some Indian companies will require a lot to be recapitalised. However, since the news is new we will examine all options."

    Singapore Airlines Vice-President (Public Affairs) Nick Ionides said the airline keeps all investment options open but added that there were no discussions taking place on the purchase of stake in an Indian carrier. "We aren't in a position to comment on hypothetical questions."

    Meanwhile, official sources said there would be no automatic approval for foreign airlines wanting to invest in a domestic carrier.

    The proposal would be cleared by the inter-ministerial Foreign Investment Promotion Board (FIPB) which is likely to consider a variety of issues, including the source of funds and security issues, before granting clearance to foreign carriers investing in Indian airlines.

    Global airlines wary of picking up stakes in Indian carriers
     
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  3. Tshering22

    Tshering22 Sikkimese Saber Senior Member

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    They themselves are not in a good condition. Add to that the terrible tax structures airlines have in India. Aircraft maintenance is another pain in the country with the government having pathetic regulations. Airspace constraints, no concessions on fuel import, Air India's bullying etc.. who would want to challenge the airline that the government has protected so selfishly?
     
  4. Yusuf

    Yusuf GUARDIAN Administrator

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    On the face of it, one would say why anyone pick up stake in indian carriers when they are in the dump. Once they had all made a beeline but not allowed by regulations. Now they know that they are being called in because the airlines are suffering.

    On the other hand, i am reminded of Laxmi Mittal who made it his habit of acquiring sick steel units and then turning them around. Today he is the biggest steel producer and a very rich man.

    If the foreign airlines look at the positives of entering the indian market, they would not lose the opportunity to acquire indian carriers and make money in the future.India is going only one way and that is UP.
     

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