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INDIA SECTION

INDIA MARKET

Waiting in the Wings global airlines. The Etihad-Jet strategic debt and liquidity constraints, in addition
alliance will certainly infuse significant to inadequate infrastructure, poor
After being on the brink for some time, investor interests in India, especially management, and rising fuel prices.
India’s ailing civil aviation sector is from cash-rich Middle Eastern and Attracting investments seems like the
slowly taking flight again. The infusion Southeast Asian airline operators. only option for the local airlines.
of US$380 million by Abu Dhabi- “For the whole aviation industry as “Some foreign investors have evinced
based Etihad Airways into Jet Airways, such, the Jet-Etihad deal will become interest in our airline after the Indian
India’s largest private airline, signalled the base of valuation for all companies. government recently allowed foreign
changing fortunes for the country’s For that matter, SpiceJet, IndiGo and airlines to own up to 49% of local carriers.
aviation industry. Go Airlines will all get this kind of But it will be premature to comment on
In the first investment since the valuation if somebody is interested in the prospect of any fresh equity issuance
government relaxed ownership rules to investing in these companies,” Sharan to such interested parties and confirm or
allow foreign operators to buy 49% of Lillaney, an analyst at Angel Broking, deny names of any specific entity,” one
local airlines in 2012, Etihad Airways has asserts. Indeed, Qatar Airways and Air SpiceJet official notes.
acquired a 24% stake in the Indian carrier, Arabia are looking at buying stakes in Kingfisher Airlines, grounded since
according to an announcement in April. It low-cost carriers SpiceJet, Go Airlines last October, is also trying to negotiate a
looks to be a win-win situation for both and grounded Kingfisher Airlines. deal with Southeast Asian carriers, such
as Etihad will get a bigger foothold in the “These Gulf carriers are also looking as Singapore Airlines, and Gulf carriers
fast-growing Indian market, while Jet for partners for a strategic alliance or a including Qatar Airways. Debt-ridden
will get much-needed funds and retire start-up airline in the country,” an Indian Kingfisher says it has been “in advanced
its debt totalling US$2.1 billion at end- civil aviation ministry official says. talks with a foreign company or airline
December 2012. “The deal is expected for a potential investment” since the
to bring immediate revenue growth and Situation at present government relaxed investment norms.
cost synergy opportunities,” says James The aviation industry in India lost over Furthermore, a recent statement
Hogan, Etihad’s CEO. He cited up to US$5 US$10 billion in the past six years and by Qatar Airways chief Akbar Al Baker
million as a likely figure. Indian carriers need funds for expansion that the airline is interested in buying
Owing to its strategic position, India and to clear large debts. Most airlines a stake in an Indian airline has fuelled
is an attractive destination to many are facing multiple headwinds of high speculations about the potential target,

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