Gulf Airlines Look towards India for Expansion

Gulf airlines could invest in Indian carriers once the Indian Government decides to allow foreign airlines to buy stakes in domestic ones. Reports suggest that Emirates, offering regular flights to India, could well buy stakes in debt-ridden Kingfisher.

As the Indian Government contemplates easing restrictions on stake-building by foreigners in domestic airlines, Gulf airlines could very well plan to invest in Indian carriers such as SpiceJet and Kingfisher Airlines.

The Indian government is considering a proposal to allow foreign airlines acquire up to a 49% stake in local carriers. If implemented, the move will offer the much needed funds to a debt-laden industry. Indian aviation sector has been marred by the rising fuel prices and other costs.

Last week, India’s Civil Aviation Minister Ajit Singh has said that the federal cabinet may discuss “very soon” the proposal to alter the current foreign direct investment (FDI) rules. The minister, however, refused to give any timeframe.

Emirates Airline, Etihad Airways and Qatar Airways are the three Gulf airlines that are reportedly eying the Indian airlines. Each of the airlines offers attractive deals on flights to India from their respective hub airports and other cities.

Dubai-based Emirates has indicated that the airline is open to options when it comes to investing in an Indian carrier.

“The airline is open to looking at anything that helps its business and is at the right price,” said Chairman and CEO of Emirates airline Shaikh Ahmad bin Saeed Al Maktoum.

However, the airline is not ready to make any commitments yet.

“Talking about the business, there are many other companies like that around the world which we could look at, but don’t expect us to buy everything,” Shaikh Ahmad bin Saeed Al Maktoum said in a news report published in the Gulf News.

Analysts believe that in case regulatory barriers are lifted, the struggling Kingfisher Airlines is the most likely acquisition target for the airlines in the Gulf.

They also believe that stakes in Indian airlines like SpiceJet and Kingfisher would direct an escalating number of India middle class travellers on Gulf carriers’ long haul travel networks via Dubai, Doha and Abu Dhabi.

India remains a highly critical market for such airlines. Not only is the country a top holiday destination that fuels demand for cheap flights to India but the country is likely to play a crucial role in the global network expansion of these airlines.