Qatar Airways is considering acquiring a stake in India’s IndiGo airline

Qatar Airways is considering acquiring a stake in India's IndiGo airline

Qatar Airways has expressed interest in purchasing a stake in India’s low-cost carrier IndiGo. IndiGo and the Doha-based airline have a codeshare agreement in place to connect more destinations. Despite the difficulties of the previous year, Qatar regards IndiGo as a valuable commodity due to its performance and market place.

Still interested

Qatar Airways CEO Akbar Al Baker said in an interview with Mint that he is interested in buying a stake in budget airline IndiGo. Qatar has shown interest in purchasing a portion of the airline before, with similar discussions taking place in 2019. Mr. Al Baker previously said, “I don’t think this is the right moment,” after previous talks failed to bear fruit.

Mr. Al Baker, however, is bringing up the issue of buying a stake in IndiGo for the second time in nearly two years. IndiGo is seen by Qatar Airways as a good partner and a way to strengthen relations with India’s significant market.

Qatar Airways

In late 2019, Qatar Airways and IndiGo signed a codeshare agreement. Photo: Qatar Airways

IndiGo and Qatar already have a codeshare agreement in place, which was signed in November 2019. While the agreement was initially limited to three routes, it did pave the way for potential collaboration between the carriers.

Smart move

The decision to partner with IndiGo would almost certainly be profitable for Qatar Airways. Mr. Al Baker, when asked why he was interested in buying a slice of IndiGo, said,

“Our investment is based on profitability and quality. We’re interested in IndiGo because it’s India’s largest and most successful airline. And India continues to be a strategic market for Qatar Airways.”

Qatar clearly sees a win-win situation in purchasing a stake in IndiGo. One benefit is access to IndiGo’s extensive route map, which includes 67 domestic routes. Qatar already flies to 13 destinations around the world, but it has been trying for a long time to expand its service in India. A partnership with IndiGo will enable the company to transport hundreds of thousands of additional passengers per year on the world’s largest route network.

Qatar Airways

IndiGo has a domestic market share of more than 50% and offers flights to 67 destinations across India. Photo: Getty Images

The second advantage will come from IndiGo’s own worth. The Indian market is dominated by the low-cost carrier, which has a fleet of over 250 aircraft. Although the carrier has been losing money for the past year, it has a track record of making money in the past. IndiGo, unlike other international airline acquisitions, is a sure bet to be profitable in the long run.

Precedent

This isn’t the first time one of the ME3 has put money into an Indian carrier. Etihad made an ill-fated bet in Jet Airways in 2013, purchasing a 24 percent stake in the airline. Although the offer was beneficial in the short term, Jet went bankrupt only six years later.

Though foreign investments in Indian airlines have a shaky track record (Jet is the only one), Qatar has shown to be much more cautious with its holdings. The Qatari flag carrier could benefit greatly from a deal with IndiGo.

However, the acquisition must first pass muster with regulators and shareholders, who may not be enthusiastic about the proposal. For the time being, keep an eye out for any potential talks between the airlines that could signify a reciprocation of Qatar’s stance on IndiGo.

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Cover Photo Credit: Qatar Airways