The Kuala Lumpur-based low cost airline, Air Asia, said it will look at setting up an Indian subsidiary a day after the Government said there was broad consensus in Government on allowing foreign airlines to pick up equity in domestic airlines.
On the other hand full service airlines including the Dubai-based Emirates Airlines, Singapore Airlines and the German carrier Lufthansa have said they have no such plans.
“Yes we will look at investing in India. This is very exciting news. My personal preference will be to look at setting up a subsidiary airline in India rather than look at investing in an Indian carrier. India is a market of a billion people. When they have access it will be good for growth,” he said.
No acquisition plans
He, however, ruled out taking over an existing operator.
“I do not know enough about Indian (airline) companies. Some Indian companies will require a lot to be recapitalised. However, since the news is new we will examine all options,” the airline Chief Executive, Mr Tony Fernandes, said in a telephone interview.
The Senior Vice-President, Commercial Operations, West Asia and Indian Ocean, Emirates Airlines, Mr Majid Al Mualla, said that the airline has no plans to acquire a stake in another airline in India or anywhere else.
“We are busy focusing on many aspects of our own growth,” he added.
Echoing almost similar sentiments, a Lufthansa spokesperson said the airline currently has no plans to take equity in any Indian carrier. “Our strategy to achieve a strong presence in India is working,” an airline spokesperson said.
Singapore Airlines Vice-President, Public Affairs, Mr Nick Ionides, said that the airline keeps all investment options open but added that there were no discussions taking place on the purchase of a stake in an Indian carrier. “We aren't in a position to comment on hypothetical questions,” he added.
A spokesman for International Airlines Group (IAG) said it will be wrong to speculate about the Group's interest in any Indian airline at this stage as the process to allow foreign airlines to invest in Indian carriers has not yet been fully approved.
IAG, one of the world's largest aviation groups, is the parent company of British Airways and the Spanish carrier, Iberia.
Industry sources say that the reasons for domestic carriers appearing unattractive to foreign investors include the current average operating loss of Rs 900 per seat, and also the fact that all the three listed companies – Jet, Kingfisher and SpiceJet – are making losses with their market capitalisation falling sharply.
Mr Paresh Parekh, Partner, Ernest and Young, however, felt that from a long-term perspective, the Indian aviation sector has a lot of potential.