Qatar Airways Ltd. is in talks to purchase a stake in IndiGo, India’s biggest carrier, according to an e-mailed statement from the Gulf carrier today.

The “only airline” it is talking to is IndiGo, the Doha-based company confirmed, without elaborating, denying local media reports it was negotiating with rival SpiceJet Ltd. InterGlobe Aviation Ltd., the owner of IndiGo last month filed a draft red herring prospectus to sell shares in an initial public offering.

“It could possibly be they take a minority stake,” Kapil Kaul, the South Asia chief executive officer for the CAPA Centre for Aviation, said in an interview on Bloomberg TV India. But beyond that, he said he didn’t see what “value addition” Qatar would bring to IndiGo.

Low fares and economic growth that boosted incomes over the past decade helped IndiGo find first-time fliers and become the biggest airline in the world’s second-most populous nation. The profitable carrier is a rare bright spot in India’s fiercely competitive aviation sector, where carriers have lost a combined $10 billion since 2009 and IPOs have fallen below sale prices.

IndiGo, which flies mostly within the country, operates a fleet of single-aisle planes from Airbus. The carrier started operations in August 2006 just as a rash of budget airlines entered the country, challenging full-service carriers like Jet Airways India Ltd. on expectations that rail passengers would trade up to flights.

Not Interested

Qatar Airways would be keen to buy up to 49 percent of Indigo but the Indian airline has no plans to sell, Chief Executive Officer Akbar Al Baker told reporters at a conference in Dubai in May, adding that he has a personal relationship with IndiGo’s owner. IndiGo is the best-run and most-successful carrier in India and if there was an opportunity to take a stake in the airline, Qatar Airways would be very interested, Al Baker said at the time.

A deal would mean a boost for Qatar Airways access into India, where its Gulf rival Abu Dhabi-based Etihad Airways, already has a 24 percent stake in Jet Airways. Al Baker said last month that he is looking to build Qatar Airways’ global presence by buying stakes in other airlines.

Always Bigger

“We don’t go and just do 5 percent,” he said on the sidelines of the annual meeting of the International Air Transport Association in Miami early June. “We would always take a bigger share.”

IndiGo probably had a profit of $150 million to $175 million in the fiscal year that ended March 31, according to estimates by CAPA Centre for Aviation. The airline’s domestic market share will probably exceed 40 percent in the current fiscal year, CAPA’s Indian unit predicts. GoAir was the only other Indian carrier to earn a profit last fiscal year, according to CAPA India.

IndiGo has taken delivery of 100 A320 planes so far and has outstanding orders for 180 more. In October 2014, IndiGo signed an agreement with Airbus to buy 250 A320neo single-aisle planes in what will be Airbus’s largest order by number of aircraft.

Denying talks with SpiceJet, Qatar Airways said it doesn’t have any form of interline agreement with the budget carrier and it isn’t planning to pursue any form of arrangement in the future.

–With assistance from Sunil Jagtiani in New Delhi and Deena Kamel Yousef in Dubai.


This article was written by Siddharth Philip and Anurag Kotoky from Bloomberg and was legally licensed through the NewsCred publisher network.

Photo Credit: An IndiGo Airlines A320 aircraft is parked on the tarmac at Bengaluru International Airport in Bangalore. Vivek Prakash / Reuters