Indian Carriers Ponder Threat of Possible Qatar Incursion

A stated intention by Qatar Airways to start a fully owned domestic Indian carrier has the Federation of Indian Airlines voicing objections to the government on sovereignty and security grounds, quite apart from concerns that the Qatari airline could eat into the fledgling yields of India’s airlines.

Arguing that the move would conflict with the "Make in India" policy that encourages Indian companies to establish new businesses domestically, SpiceJet chairman Ajay Singh has voiced particularly vociferous criticism. “This will not get any investment into India,” he told AIN. “When you set up an airline, you lease aircraft, and this will be done from outside India. So there’s nothing which really comes into the country.”

“[It’s] all about ensuring that we have a level playing field and that Indian aviation sector can grow and prosper...that India will build its own Etihads, Emirates and Qatars,” he added. However, others see Qatar’s entry in a different light. “Concern about a foreign carrier is a misnomer,” said Harsh Vardhan, chairman of New Delhi-based Starair Consulting. “Qatar will have to compete with established and mettle-worthy players in India. It will have to face challenges of a crowded market where airlines face cyclic survival and no sustainable economic viability. Unlike the Middle East, India has a dog-eat-dog environment.”

Furthermore, with major airport slots unavailable and parking slots restricted due to congestion, a new entrant such as Qatar, used to a virtually monopolistic environment in its own country, would find India’s carriers worthy competitors, said Vardhan.

India’s aviation policy allows 49 percent direct foreign investment in domestic carriers under the so-called automatic route. The limit can increase to 100 percent with government approval. Perhaps not coincidentally, Qatar’s suggestions of a wholly owned Indian subsidiary follow an agreement signed in India last December by Prime Minister Narendra Modi and Qatar’s Prime Minister Sheikh Abdullah Bin Nasser Bin Khalifa Al Thani on investments in infrastructure including airports and airlines.

At a press conference in Berlin in early March, Qatar Airways CEO Akbar Al Baker said he will concentrate his efforts to establish an Indian airline once Qatar took its planned 49 percent stake Italy’s Meridiana. The acquisition of joint control over Italy’s Meridiana by Qatar Airways and Alisarda gained clearance on March 23 from EU merger regulators. Bloomberg reported that at the UK Qatar Business Forum on March 28 Al Baker had briefed lawyers in India and will formally seek to establish the new airline soon, and subsequently initiate an aircraft tender. The airline would operate 100 narrowbodies.