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IndiGo eyes the Maharaja’s international ops

Author: IANS/Friday, July 7, 2017/Categories: Aviation

IndiGo eyes the Maharaja’s international ops

Mumbai (IANS) - Budget passenger carrier IndiGo on July 6 said that it is interested in acquiring the national passenger carrier Air India's international operations. However, it is not keen on going in for a joint venture (JV) with the government.

According to Rakesh Gangwal and Rahul Bhatia, founders of IndiGo, the budget airline is interested in Air India's international operations and that of its low-cost international subsidiary Air India Express.

However, Gangwal made it clear that IndiGo would not be "interested" in forming a JV with the government to acquire Air India. Gangwal and Bhatia were speaking at a conference call with analysts and investors.

"We are interested in the airline operations of Air India. And more specifically, we are focused narrowly on Air India's international operations and Air India Express," Bhatia said.

"On the other hand, if the government of India decides to sell all of Air India's airline operations and, I emphasize 'airline operations', to a single entity and not carve out the international operations, we would still be interested in exploring that option." 

Last month, IndiGo had expressed its interest in participating in the stake sale of the flag-carrier after the Union cabinet's decision on Air India following NITI Aayog's recent report to the Civil Aviation Ministry recommending strategic disinvestment in the loss-making Air India.

Gangwal said that the budget passenger carrier has its own plans to start international long-haul flights, irrespective of the outcome of its offer to acquire Air India's overseas operations.

"Our internal work shows that IndiGo is a natural player to take advantage of the significant and lucrative international market opportunity that India offers. Specifically, because of our large domestic network, we are well positioned to capture this massive and growing international traffic," Gangwal said. 

"So, irrespective of how the Air India story plays out and based on all our internal work, we are generally of the view that it makes fundamental economic sense for us to enter the long-haul, international market." 

Gangwal pointed out that "just like" the low-cost model disrupted the short-haul, full-service legacy carriers starting a few decades ago, the international long-haul markets are now ready for the right type of low cost operations.

"Our journey of building an international, low-cost operation will be gradual -- a journey that we would take thoughtfully and deliberately," Gangwal said.

"To be clear, whether we do some limited transaction with Air India, or launch our own long-haul, international operations or a combination of both, the business case would need to be EPS (Earnings per Share) accretive for us to go down that path." 

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S Vijaykrishnan
S Vijaykrishnan

IANS

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