Qatar Airways has announced that it is interested in buying a stake in India’s low-cost giant IndiGo. The Doha-based airline currently has a codeshare agreement with IndiGo to connect more destinations. Despite the challenges of the last year, Qatar sees IndiGo as a valuable asset considering its efficiency and market position.
In an interview with Mint, Qatar Airways CEO Akbar Al Baker said that he is very keen on picking up a stake in budget giant IndiGo. This isn’t the first time Qatar has signaled interest in buying a part of the airline, with similar talks in 2019. Previous discussions did not lead to fruition, with Mr. Al Baker saying then, “I don’t think this is the right time.”
However, nearly two years later, Mr. Al Baker is once again raising the subject of purchasing a stake in IndiGo. Qatar Airways sees IndiGo as a strong partner and a way to further deepen ties into the important Indian market.
IndiGo and Qatar already have an existing relationship through a codeshare agreement signed in November 2019. While the agreement was only limited to three routes initially, it opened the door to further cooperation between the carriers in the future.
For Qatar Airways, the decision to partner with IndiGo would likely prove to be profitable. Explaining the interest in buying a piece of IndiGo, Mr. Al Baker said,
“Profitability, and efficiency are main criteria of our investment. IndiGo is the largest and most efficient Indian airline, which is why we are interested in them. And India remains strategically an important market for Qatar Airways.”
It’s clear that Qatar sees a dual benefit from buying a stake in IndiGo. One would be access to IndiGo’s expansive route map of 67 domestic routes. While Qatar already flies to 13 destinations across the country, it has long been trying to increase services in India. A deal with IndiGo would open the door to carrying hundreds of thousands of more passengers every year through the largest route network.
The second benefit would be through IndiGo’s value itself. The low-cost giant operates a fleet of over 250 planes and dominates the Indian market. While the carrier has been struggling with losses for the last year, it has a long run of turning a profit in the past. Unlike other foreign airline investments, IndiGo is a strong bet to prove lucrative in the long run as well.
This wouldn’t be the first time one of the ME3 has invested in an Indian airline. In 2013, Etihad made an ill-fated investment in Jet Airways to buy 24% of the carrier. While this deal helped in the short term, Jet went on to collapse just six years later.
While the history of foreign investments in Indian airlines isn’t too bright (Jet has been the only one), Qatar has proven a lot more careful with its portfolio. A deal with IndiGo could bring enormous upsides for the Qatari flag carrier.
However, before that, the purchase will have to pass the muster of regulators and shareholders, who may not as hot on the idea. For now, keep an eye out for any possible discussions between the airlines signaling a reciprocation of Qatar’s view on IndiGo.
What do you think about a possible Qatar Airways investment in IndiGo? Let us know in the comments!