NOVEMBER 7, 2019
NEW DELHI – Qatar Airways on Thursday reiterated its interest in picking up a stake in InterGlobe Aviation Ltd-owned IndiGo, India’s largest domestic airline, but said it does not want to take part in the privatization of flag carrier Air India Ltd.
Qatar Airways’ plan will be a blow to the Indian government’s renewed efforts to privatize debt-laden Air India. A similar effort in 2018 failed to attract even a single bidder.
“We are very keen to take a stake in IndiGo but I don’t think this is the right time,” Qatar Airways group chief executive Akbar Al Baker said at a news conference to announce a code-share agreement with IndiGo. “We would like to expand our relationship with IndiGo. There is some disagreement within the airline (promoter feud), so we will not like to comment on our future plans for IndiGo till these issues are resolved.”
A spokesperson for IndiGo declined to comment on Qatar Airways’ interest in taking a stake in the Gurugram-based airline. “Currently, we have just entered into a partnership with Qatar Airways,” the spokesperson said.
Qatar’s interest in IndiGo comes amid a battle between the promoters of InterGlobe Aviation that has reached US shores, with Rahul Bhatia-led InterGlobe Enterprises (IGE) filing a lawsuit in Florida and Maryland courts in October to seek information from co-founder Rakesh Gangwal and independent director Anupam Khanna. Gangwal first complained to the Securities and Exchange Board of India in July that Bhatia’s IGE group’s outsized rights have helped it push through transactions and policy changes that violate corporate governance rules. Bhatia has denied the allegations.
The government plans to shortly invite bids to sell its entire stake in Air India, after potential buyers baulked at an initial attempt to divest a partial stake in the airline with the government retaining a minority stake in it. The expression of interest document for the privatization process is likely to be finalized by November-end, government officials had earlier told Mint.
In the latest attempt, the government may ease rules, which currently allow foreign carriers to own only up to a 49% stake in an Indian airline.
Qatar Airways’ interest in IndiGo comes amid a blockade imposed by a coalition led by Saudi Arabia, Egypt, Bahrain, and the United Arab Emirates on Qatar and its state-owned airline, since June 2017, that has restricted its flights, driven up costs and led to the airline reporting huge losses.
“We would be making $700-800 million profit if the blockade was not there. The loss, however, was much less than what we had accounted for,” said Al Baker.
Qatar Airways posted a loss of 2.3 billion Qatari riyals ($639 million) for the year ended 31 March, as it grappled with the second year of an embargo by its neighbours.
On Thursday, Qatar Airways signed a one-way code share pact with IndiGo. Under the pact, Qatar Airways would be able to place its code on IndiGo flights between Doha and Delhi, Mumbai and Hyderabad.
“Code share between IndiGo and Qatar Airways are signs of a growing cooperation between the two airlines,” said Al Baker.
Code sharing allows an airline to book its passengers on partner carriers and provide seamless travel to destinations where it has no presence.
The code-share agreement between Qatar Airways and IndiGo is expected to fuel the Indian carrier’s overseas ambitions and improve traffic from the fast-growing Indian air travel market to the Gulf carrier’s network.
This is the second code-share agreement for IndiGo after a similar pact with Turkish Airways.
“We are starting with baby steps, (like code-share), which will only grow (going forward),” IndiGo CEO Ronojoy Dutta said. “IndiGo and Qatar (Airways) fit together well and we both have same track record for success.” He added that eventually IndiGo, through its code-share partnership, will take passengers from India to destinations beyond Doha such as Europe and the US.
IndiGo’s plan to start flights to Europe in the years ahead would remain unaffected by the pact with Qatar Airways, Dutta said.
“We want to go non-stop to Europe, which is why we have placed orders for A321XLR aircraft (with extended range),” Dutta said, adding that the pacts with Qatar Airways and Turkish Airlines will instead supplement IndiGo’s plan to fly to Europe.