Logistics

Why SpiceJet is a draw for Gulf–based airlines

Ashwini Phadnis New Delhi | Updated on January 24, 2018 Published on July 24, 2015

BL25SPICE_JET

While the low-cost carrier needs help to turn around, West Asian outfits need passengers to fill the aircraft they have ordered

If low-cost airline SpiceJet, which is in talks with Qatar Airways for enhanced cooperation, does end up selling a stake to the Gulf carrier, it would hardly come as a surprise. Both airlines need each other though for different reasons.

SpiceJet’s promoters have been looking to shed stake for some time now. The Marans, who were helming the airline till January this year, had been in touch with various international carriers, including some in West Asia. Senior officials from Qatar Airways and flydubai had at the time confirmed, unofficially, that talks were on with SpiceJet.

Ever since Ajay Singh re-took charge of SpiceJet, the focus has been more on reviving the fortunes of the airline than on international collaborations. But backroom channels and discussions with various airlines continue.

The key question is whether Qatar Airways is really interested in SpiceJet. Many point out that with a fleet of 20 Boeing 737s, SpiceJet is too small a fit for the Qatar, which has a fleet of 144 aircraft with another 340 on order.

IndiGo, a better bet?

IndiGo, which has a fleet of 96 aircraft, could be a better choice.

Qatar Airways Group Chief Executive Officer Al-Baker has told global media that he will be interested in picking up a stake in IndiGo if its promoter Rahul Bhatia was willing to sell. He reiterated this position to BusinessLine at an IATA meet in Miami in June. But Bhatia has not shown much interest in this proposition so far.

Qatar Airways is the only one of the ME3 (Middle East -3) carriers — the others being the Dubai-based Emirates and Etihad — which has not seen a significant increase in the number of seats it can operate to India thereby taking more Indian passengers on their international travels.

In comparison, Emirates currently operates 186 weekly flights to and from India, largely due to exchange of a bilateral in 2011.

Etihad, which has a 24 per cent stake in Jet Airways, also managed to ramp up operations from India thanks to the additional seats it managed, days before it struck the deal with Jet, in 2013. Qatar, on the other hand, operates 95 flights a week to India.

This leaves Qatar, which has not only ordered more aircraft but has also opened up Hamad International Airport that is capable of handling 50 million passengers annually. This is why an Indian carrier becomes a good target.

What is also probably fuelling Qatar’s interest in India is the good equation the Emir shares with Prime Minister Narendra Modi, and the positive note struck following talks between the two in March.

While Qatar’s interest in obtaining a stake in an Indian carrier may be linked to the overall economic interests of the emirate, there is little denying the equal interest for an international airlines. The reasoning for this is simple: the Indian government has been going slow on exchange of air service agreements that allow foreign airlines to ferry more Indians abroad.

With many international airlines ordering a large number of aircraft, India becomes a key market. It is in this context that the latest news of SpiceJet being in talks with various Middle Eastern carriers should be viewed.

Published on July 24, 2015
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