Emirates has quashed rumours today that it will be bidding to take over troubled national carrier Air India. The Dubai-based airline is the largest foreign operator in India but has confirmed it has no interest in acquiring the Indian carrier. The airline is focussing instead on “organic growth” in the country.
Air India back on the market with a new sweetened deal so speculation is rife regarding who will bid for the struggling airline. But one main contender has ruled themselves out very early on.
Despite already having a decent 10% share in the Indian aviation market, Emirates released a statement saying that,
“We do not intend to acquire equity in Air India as we are currently focused on our own organic growth. We remain committed to support India’s vision for the tourism and aviation sectors”.
If it did want a stake in the airline, Emirates would only be able to acquire up to 49% of Air India due to government restrictions. Previously, the government did not allow any foreign investment. But this rule has been changed to hopefully secure a buyer after talks failed in 2018. There are still plenty of restrictions on Indian airspace so many experts believe an Indian carrier such as Vistara or SpiceJet will purchase Air India.
Emirates benefits anyway
If it were SpiceJet who bought the airline, it may benefit Emirates after all. Emirates signed a codeshare agreement with SpiceJet in November last year. This is the first time SpiceJet ever signed such a document.
Emirates customers flying to India now have the advantage of more options and a seamless travel experience thanks to the agreement. If SpiceJet extended its network by bidding for Air India, Emirates may not need to buy the airline in order to reap some rewards.
SpiceJet currently operates 172 domestic routes that Emirates passengers can now access easily and smoothly. Air India operates 57 domestic routes which, if taken over by SpiceJet, would give Emirates a huge reach in India without having it provide start-up capital to get Air India back in the skies. A smart move.
Despite not putting in a bid for Air India, Emirates has still maintained it is interested in growth in the region. The Indian aviation market is still fairly restricted but as these restrictions lift Emirates may seek to take advantage of the new openings.
More than half of Indians traveling on international routes pass through hubs in the United Arab Emirates. Most of this traffic is facilitated by the large Gulf airlines such as Emirates and Etihad. Additionally, the Indian government is looking to increase tourism with Vision 2040. If Emirates is looking to grow alongside the market into 2040, it won’t want to be cumbered with a debt-ridden airline such as Air India.
As a part of Vision 2040, it is expected that 75 airports will be added to the existing 75 Indian hubs. Emirates is no doubt eying new routes to these airports rather than the existing network of Air India flights. Emirates is due to take delivery of more new Airbus A380s over the coming months with a total of 123 A380s in its fleet by 2012. In a statement Emirates said that “Airbus A380s have worked out well for us, in Mumbai and elsewhere”.
Although Emirates has ruled itself out of the bidding for Air India, India itself is still firmly within its sights. But Emirates isn’t the only Gulf carrier who was rumored to be interested in Air India. Abu-Dhabi-based Etihad Airways is still in the running. Etihad already has 24% of Jet Airways and has not commented on the sale. Could a Gulf carrier get involved after all? I guess we’ll have to keep watching this space to find out!