Looking at immense opportunities in India’s aviation market, Doha-based Qatar Airways will be starting a full-fledged domestic airline company for India operations.
With India’s aviation sector growing at a rate of 10% annually, this move is seen to tap the fast-growing market. Qatar has already started looking for personnel in India.
The establishment of the new airline was announced at ITB Berlin by Qatar CEO Akbar Al Baker. “Very soon we will have a 100% owned domestic carrier in India that will belong to Qatar Airways,” he said.
Qatar’s sovereign wealth fund will own the carrier, and Qatar Airways would then take a stake, Al Baker added. The move became possible last year when India began allowing 100% foreign direct investment (FDI) in domestic carriers.
India’s domestic aviation market reached nearly 100 million passengers in 2016 and is set to displace the UK as the third-largest aviation market by 2026.
Qatar has had an eye to invest in India for some time. It was in talks with Haryana-based IndiGo Airlines, India’s largest low-cost airline with a market share of close to 39.6%, to pick up a stake in the company, but nothing was finalized.
Qatar is among the top airlines in India in terms of market share of international travel to and from the country. Dubai-based Emirates is the biggest international airline in India, followed by Abu Dhabi’s Etihad. Qatar, in terms of traffic, is followed by Jet Airways, national carrier Air India and Air India Express.
Qatar is looking to buy 100 narrow body planes for India operations.
In June 2016, the Indian government announced its new National Civil Aviation Policy, in which it said that the FDI limit for domestic airlines has been raised from 49% to 100%, with FDI up to 49% permitted under the automatic route and FDI beyond 49% with government approval.
Foreign airlines will continue to be allowed to invest in capital of Indian companies operating scheduled and non-scheduled air transport services up to the limit of 49% of their paid up capital and subject to the conditions in the existing policy, Indian minister for civil aviation Jayant Sinha informed the parliament.
Increasing the FDI limit for these aviation services will not only encourage competition by lowering prices but will also accord choice to consumers, the minister added.
Aviation secretary Rajiv Nayan Choubey said recently that any new proposal from a foreign entity to operate in the country will be taken up as per the rules laid down by the National Civil Aviation Policy, 2016.
In order to provide better penetration, the government has promoted a regional aviation scheme which envisages providing connectivity to unserved and underserved cities and towns by reviving existing airstrips and airports.
Under the scheme, nearly 43 airports can receive flights; the government wants to increase the number of operational airports from the current 75 to 118.
However, many regional airlines have failed in the last decade when the government did not support them. These include Kingfisher Airlines, Air Costa, Paramount Airways, Air Pegasus, Air Mantra and MDLR Airlines.
This is not the first time Qatar has attempted to launch a subsidiary outside its home territory; it had planned to launch a full-service airline in Saudi Arabia which was to be called Al Maha Airways.
Qatar Airways is IAG’s biggest shareholder. The airline also owns stakes in LATAM Airlines Group and Italy’s second-largest airline, Meridiana.
By Jagdish Kumar
India Correspondent | Mumbai
