Last year Abu Dhabi secured 37,000 additional seats per week taking total to over 50,000 seats between the two countries. Two months ago India enhanced Dubai's seat entitlement by over 11,000 seats per week over the existing 54,000 seats. Qatar has virtually exhausted its entitlement of 24,000 seats per week and as a result Qatar Airways is unable to expand services to India. That is one reason for tapping for partners in India. Last year the airline held preliminary discussions with SpiceJet for a potential stake sale but talks fizzled out, said sources in the know.
IndiGo is India's most profitable airline (Rs 787 crore net profit in FY 2013) and has a market share of about 30 percent. It is also the fastest growing airline in India and is adding 9 Airbus A320 planes to its 78 aircraft fleet in 2014.
According to experts, IndiGo's strengths lie in its network, reliability, good public perception, financial strength and its stable management. Airline groupings such as Air France-KLM led SkyTeam and Lufthansa-led Star Alliance have explored partnership with IndiGo. Qatar Airways CEO Akbar Al Baker spoke of a code share tie up with IndiGo last May but nothing has come from all these initiatives.
There have been partnerships and equity ownerships between full service and low cost airlines. Lufthansa has 15.6 stake in US LCC Jet Blue. However IndiGo's current strategy is not inclined towards making a change towards a hybrid model.
Like a typical low cost airline IndiGo charges for meals, flies single class aircraft point to point and has no loyalty programme. It also does not use global distribution systems used by full service airlines for ticket reservations. "Cost and complexity of alliance membership are key concerns for IndiGo,'' Centre for Asia Pacific Aviation said in its 2012 report on SkyTeam opening up to LCCs and hybrid airlines.
"IndiGo's and Qatar Airways business models are different. How will the integration take place,'' asks an aviation industry source. "I do not think there are synergies between Qatar Airways and IndiGo at present. SpiceJet may be a better proposition as it is seeking funds and has shown willingness to make changes towards a hybrid model including its Max product and increasing seat pitch in aircraft,'' said Devesh Agarwal, editor of Bangalore Aviation.
" I dont see IndiGo changing its business model but feed to Doha from various Indian cities remains the driver for Qatar Airways,'' said Kapil Kaul of Centre for Asia Pacific Aviation. Kaul believes that a partnership between IndiGo and Qatar is still possible with IndiGo offering economy class product and Qatar Airways concentrating to premium traffic.
Qatar Airway's only acquisition till now has been its 35 percent stake in cargo airline Cargolux but it sold the stake after a year in 2013 due to management differences. The airline is setting up domestic airline in Saudi Arabia called Al Maha Airways and the launch has been delayed till November. Three years ago it was considering setting up a low cost airline in the wake of competition from AirArabia and FlyDubai but plans were put on hold.
Qatar Airways has been looking to increase its footrprint in India but does not have traffic rights to launch new services. Air India and Jet Airways barely utilise 6,000 weekly seats (of the 24,000 which is the available entitlement) to Doha. No other Indian airline flies to Doha. The civil aviation ministry also opposed the plan to increase traffic rights with Qatar in lieu of concessions in purchase of liquified natural gas from the country.
"Qatar Airways needs access to the Indian market to support its North American expansion and its other markets. There is a large and expanding Indian community in North America mostly affluent professionals who generate lots of Visting Family and Relatives traffic which the three main Gulf airlines are capitalizing on. A tie up with an Indian airline will increase Qatar Airways relative position within the oneworld alliance. My gut feeling is Qatar Airways would go for a commercial arrangement with maybe a small equity stake or a leaseback deal to provide IndiGo with some cash. Qatar does not have the UAE's clout or market so there is not much the Doha can offer Delhi in terms of access to Indian airlines,'' said Oussama Salah, aviation analyst and President of Gulf Aeronautics-USA.