Emirates looking to pick up stake in Indian carrier

Emirates wants to pick up a stake in an Indian carrier even as the government deliberates on the merits of relaxing the caps on foreign direct investment (FDI) in airlines.

Travel News
Travel News

West Asian carrier Emirates wants to pick up a stake in an Indian carrier even as the government deliberates on the merits of relaxing the caps on foreign direct investment in airlines.

“Emirates will consider picking up a stake in domestic (Indian) carriers if the government allows such a move,” Majid al Mualla, senior vice-president (commercial operations), West Asian and Indian Ocean region, told The Telegraph.

According to al Mualla, “India is a growing aviation market which cannot be ignored as its economy is booming. The middle class is growing at a rapid pace and the aviation sector has a good prospect in the country.”

Though it allows 49 per FDI in aviation, the Indian government has barred the entry of foreign carriers because of security concerns.

Besides, Indian carriers, which did not fare well in the past two years, were seen to be susceptible to hostile takeovers.

However, the inauguration of the swanky T3 terminal at New Delhi’s Indira Gandhi International Airport earlier this month could be a forerunner to major policy changes.

T3 is the fifth largest terminal in the world and will double the capacity of the Delhi airport as the government seeks to make it an aviation hub.

Indications are that the government may now be open to the aviation ministry’s proposal of allowing foreign airlines to pick up a 26 per cent stake in domestic carriers.

Several carriers, including Vijay Mallya’s Kingfisher, is in favour of the move; others such as Jet have opposed the entry of foreign players. Mallya’s Kingfisher is reported to have received offers from Virgin and British Airways.

The International Air Transport Association wants India to allow foreign investment to improve the efficiency of local carriers. Though the aviation industry in India has grown at a rapid pace, it has been accused of neglecting safety norms.

Analysts said less than one per cent of India’s 1.2 billion people travel by air. Still, given India’s large population, the number of air passengers is expected to reach 165 million by 2020, making the country’s airports among the busiest in the world.

Al Mualla said India and West Asia contribute 12.6 per cent to revenue of Emirates, which totalled $12.4 billion in 2009-10. Emirates reported a net profit of $1.1 billion in 2009-10 despite the global slowdown.

He said the carrier was expecting a 10-15 per cent increase in revenue from India in 2010-11.

During the first two months of the current fiscal, its passenger traffic from India increased about 15 per cent.

The airline operates 184 flights from Dubai to 10 Indian destinations with a weekly seat capacity of over 53,000.

Advertisement