Qatar Airways puts India airline plan on hold

Qatar Airways has been considering the launch of an Indian airline for a long time now, with nothing less than a 100 aircraft. This plan was reiterated by the airline just a few months ago as well, where they were sure of launching a Qatar Airways Indian Airline within the next year or so.

Qatar Airways has always been interested in a presence in India. When foreign direct investment in Indian airlines was announced, they immediately expressed interest in putting in a substantial amount of money in IndiGo. IndiGo has, however, not returned the favor, and been cold-shouldering them for a long while.

Qatar Airways A380

Next, then, Qatar Airways figured they would open their airline in India. India allows for a 100% ownership of airlines by foreigners, but not more than 49% stake can be owned by a foreign airline. Qatar Airways tried going around this by having Qatar Investment Authority hold the remaining 51% of the proposed airline. Now, it seems they are dropping the plan for the moment or putting it on the ice again.

I was at the IATA Indian Aviation Summit, held in Delhi on Tuesday, where H.E. Ahmed Al-Baker met the press in a closed room briefing. I wasn’t privy to the meeting but had the opportunity to talk to a lot of the journalists who were. The stance given to Qatar Airways seems to be,

This is what our lawyers are telling us. Their approach has been stifled by [the authorities] saying that ‘no, an airline cannot own 100%, nor anybody can own 100%. It has to be 49% and it has to be done through an investment authority.

Aviation secretary R N Choubey said, “QA needs to find an Indian partner for its domestic airline. An airline with 49 per cent held by QA and 51 per cent by QIA is foreign investment and foreign control. Substantial ownership and effective control has to be with an Indian entity.

This seems to be the case even when Qatar Airways gave the assurance that the airline would be run by an Indian CEO and an Indian board. It seems the government is still smarting from the bruises in case of Air Asia where a very broad-ranging brand licensing agreement almost takes away all the strategic aspects of the business in the control of Kuala Lumpur, and the Indian CEO was left to be a figurehead.

Qatar Airways CEO left the door open for another 12 months, saying if this opportunity did not present itself in the next one year, then he’d take his money elsewhere.

Al-Baker is still interested in IndiGo and has left the door open for IndiGo promoters to approach them in case they want to cash out of the airline at any point in time. However, he did not want to be playing for change and said any such offer would have to be a substantial stake for them.

Bottomline

It seems you will have to wait for another full-service airline to enter India, this time, with the standards of Qatar Airways. In the meanwhile, you need to be happy taking your business to Qatar Airways via their Doha Hub. Why not, after all, they fly their QSuites out of Mumbai and Bangalore, and it is a beautiful product.

What do you think of Qatar Airways plan to launch an airline in India?

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