Qatar Airways’ plan to create or invest in a full-service Indian domestic airlines has been placed on hold due to confusion over Indian regulatory policy.
A few months ago, Qatar Airways announced grand plans to invest in a new airline that would profitably capture the Indian domestic market. This was to be a full-service airline that would compete with inefficiently run JET Airways and Air India.
But Qatar Airways finds itself in a holding pattern with uncertainty over whether an investment will ever work.
His Excellency, Akbar Al-Baker, the eccentric CEO of Qatar Airways for the last two decades, actually sums up the matter clearly to The Economic Times:
We are really very interested to launch an airline in India but the regulation is a little bit confusing to us. Because what we gathered in the beginning is that foreigners could own 100% of a domestic Indian carrier. Our lawyers have gone and asked for the process of doing the application. And then we are told ‘no, as an airline you can only own 49%.
Sounds like typical India (and I say that in the most endearing way)…
What we are given to understand is that a foreign airline cannot own 100 per cent but a foreigner can. I don’t know what is the difference between a foreigner and an airline.
Indian Government Sends Mixed Signals
Existing policy of the government is that the substantial ownership and effective control should remain with Indian nationals and they will have to comply,” Choubey told reporters. “You cannot have substantial ownership of more than 50% because then you are violating the policy. If he thinks that he should have an airline that is entirely owned by Qataris, presently, it is not possible. If he thinks that he can run an airline that is 49% foreign owned and 51% Indian owned, that is possible.
We will lose interest in time because you know we have a fund we would like to invest. If we don’t invest in time, then we would have to invest somewhere else.
At the end of the day, we will not come, sit and run the airline in India. We will of course have an Indian management, an Indian board, an Indian chairman. So, the effective control will be with Indian nationals but the owner will be the state of Qatar – Qatar Airways.
Qatar Airways + IndiGo?
When we want to invest, we want to invest in a success story. Rahul Bhatia (co-founder and interim CEO of IndiGo) is a good friend and if he is willing to do something with us, we are very open.