India’s largest airline IndiGo and Middle East giant Qatar Airways are poised to make a joint announcement about a ‘strategic business’ decision. The announcement is expected on November 7th, and while it’s not entirely clear what the details will be, we can make a few educated guesses.
A strategic business announcement
The announcement is likely to be something along the lines of a codeshare agreement or joint venture. Should it involve an equity stake, the announcement will be big news indeed. However, local media in India are reporting that this is unlikely to be on the cards.
Qatar has, for some time, shown an interest in investing in IndiGo, but until now the airline has resisted. With around 40% of the domestic market, IndiGo is a key player and has its sights set on an aggressive expansion into international markets. You can see why Al Baker wants a slice of that pie. Back in August, Al Baker told Reuters,
“We are very interested in IndiGo … We are talking to IndiGo of doing codeshare, joint flights but not yet an equity stake in the airline.”
At the time, Al Baker said the Indian airline was not yet ready to accept a foreign investor. He did, however, say that Qatar would be ready and waiting when IndiGo was interested to talk.
What’s more likely from the November 7th announcement, however, is the formation of a code share partnership. ZeeBiz repots an industry executive as saying,
“About 5-6 months back, IndiGo and Qatar Airways were actively discussing a code-share partnership. In between, IndiGo announced code-share with Turkish Airlines. Now, it seems they have finalized the deal with Qatar Airways.”
Benefit for both
Whatever form partnership takes, it will be of great benefit to both airlines. IndiGo is keen to expand its horizons and has been aggressively targeting new routes and frequencies to international destinations. Tying up with Qatar will give IndiGo fliers access to the expansive long haul network of the Middle East airline, not to mention the comfort of their widebody operations.
All tied into this is Qatar’s desire for additional flying rights into the nation, which it will not be given as a foreign airline. In the wake of the collapse of Jet Airways, Qatar requested local authorities to allow it to add more seats on key routes, a request that has repeatedly been denied.
As an IndiGo partner, the market is suddenly wide open. With reciprocal flight numbers on connections from Doha to numerous Indian cities, Qatar will finally be able to tap the growing market that India represents.
Timing is crucial
The Qatar-IndiGo tie-up has been crucially timed to give the airlines time to bid jointly for beleaguered state airline Air India.
Al Baker has long been interested in starting an airline in India. However, the local rules deem that such an enterprise must be majority-owned by an Indian entity. As such, Qatar has been unable to really push into the Indian market in the way Al Baker would wish.
However, with a partnership in place with IndiGo, the two entities could feasibly submit a joint bid for the airline. Bloomberg reports that Civil Aviation Minister Hardeep Singh Puri has said that the privatization process is ‘in full swing’ and expected to complete in the coming months. 100% of the airline is up for sale; could this be Qatar’s next big venture?