India's largest airline IndiGo will announce a 'strategic business' initiative with Qatar's state-owned flag carrier Qatar Airways in a joint press briefing in Delhi on November 7.
An announcement was inevitable. For long, Qatar Airways' CEO Akbar Al Baker has been public about his liking for both, IndiGo and its co-founder Rahul Bhatia. Al Baker's interest comes from his keenness to have a pie of the Indian market, which despite the recent slackness remains among the fastest growing in the world.
Al Baker would have invested in Jet Airways, but the presence of 'adversary' Etihad Airways in the Indian airline meant that Qatar Airways had to stay out.
The Qatar Airways CEO also talked about starting a domestic unit in India. But, only an Indian can control operations of a domestic airline in the country, according to regulations, and that was not agreeable with Al Baker.
But, why is he so desperate to have a presence in India?
Al Baker hopes to balance out the losses in the Middle East with a presence in India. Qatar Airways reported losses of $639 million in the 2019 financial year. It is struggling to come to terms with the embargo by its neighbouring countries - Saudi Arabia, Egypt, the UAE and Bahrain - that came into effect in 2017.
The embargo has forced Qatar Airways out of many profitable routes in the region. One of the ways to make up for that loss is to get more traffic from India, say IndiGo flights feeding its service to Europe and other parts of the world. And second, there is a possibility of getting more seats to India.
As a BusinessLine report pointed out, Qatar Airways has the lowest number of seats to and from India, compared to the other two big Middle-East carriers - Etihad Airways and Emirates.
So it is clear why Qatar Airways is interested to have a 'strategic business' partnership with IndiGo. But, what does the Indian airline gain?
IndiGo's international push
IndiGo has a codeshare agreement with Turkish Airlines, helping passengers from India fly to other global destinations from Istanbul.
But, an advisory from the Indian government , cautioning Indians from traveling to Turkey, may have taken the zing out of the agreement.
An alternative base in Doha, through Qatar Airways, will help IndiGo further spread its international wings.
So, the 'strategic business' partnership will be a codeshare agreement between the two airlines? Yes, Al Baker himself confirmed so.
Will it go deeper? The Qatar Airways CEO has denied that possibility for now. But, that has not stopped the rumour mills in the industry from speculating about Qatar Airways buying a stake in IndiGo, or even a joint bid from the two airlines for Air India, in the future.Al Baker and IndiGo CEO Ronojoy Dutta will be there at the conference to clarify on these. Absence of Bhatia (the invite names Al Baker and Dutta) during the media briefing is not surprising. He would not want questions on his tussle with fellow co-founder Rakesh Gangwal to dominate the proceedings.Get access to India's fastest growing financial subscriptions service Moneycontrol Pro for as little as Rs 599 for first year. Use the code "GETPRO". Moneycontrol Pro offers you all the information you need for wealth creation including actionable investment ideas, independent research and insights & analysis For more information, check out the Moneycontrol website or mobile app.