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Low-cost Gulf carrier Air Arabia has said the airline is too small to bid for Air India, but Air India Express is a good option to bid for.
The Indian Government is all set to roll out the expression of interest for the airlines to bid for Air India. It has bundled Air India with Air India Express. Another airline, IndiGo is learnt to have also expressed interest in bidding for Air India Express.
Adel Abdulla AI.Ali, the group Chief Executive Officer for Air Arabia, told BusinessLine that
his airline was not in talks with any airlines in India at the moment. “We are a publicly listed entity. We keep getting offers. If we feel it makes business sense and fits our corporate strategy, then we will take a look,” Abdulla Al.Ali said. He said being a conservative company, shareholders’ interest was of paramount importance.
Funding airline
The airline CEO said Indian carriers should decide whether they want a strategic investor or finance. “If it is a foreign investment, then they don’t need an airline and there is enough finance in the country.” He said if the books are good, regulations are clear then it does not matter where the investment comes from, as funding the airline is no different from those in the steel industry or any other industry.
He said most of the airlines were performing well as the policies of the government were quite conducive for the sector to perform well. “Protectionism kills business. If you open the market, then the airlines will become aggressive and more investments will start pouring in.”
He said airlines from both India and the UAE had used their bilaterals fully which will allow the respective governments to start negotiations again for enhancing the capacity.
He said Air Arabia will need about 100 aircraft both for replacing the older ones and for expanding the existing network. The airline will also look at all the aircraft manufacturers before selecting the right ones.
It currently operates about 50 A320s and flies to 120 destinations. The airline has already placed orders for A321 neos which will allow it to connect to more cities farther from those it flies into and probably fly to China and certain cities in South-East Asia.
“Some of our hubs like Morocco are nine hours away. With newer aircraft, we can operate a dual aircraft type. Some of the aircraft offer lesser seats but longer range which allow us access to newer markets.”
The airline head pointed out that Air Arabia has been profitable since it began operations and during last year, it made a record profit which was 30 per cent higher than the previous year. Introducing an efficiency programme allowed the airline to have better cost savings and with the fuel hedging policy in place, it was able to reduce fuel cost by 19 per cent.
Gulf carriers
On the criticism by certain European and US carriers that the Gulf airlines dumped capital to get better market share, he said, Gulf carriers have changed the entire aviation industry and given passengers more preferences and bigger networks. Abdulla Al.Ali also said that over a period of time, the number of legacy carriers will go down and there will be more airlines which offer low fares which will allow passengers to pay for what they want.
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