Struggling Indian carriers are pulling all stops to attract foreign investment to make profits
Everyone knew that when the Indian aviation sector opened up, there would be a rush of airlines willing to invest in the country. Despite all the red tape and bureaucracy, India represents a potential passenger market of 1.2 billion people. Many of them increasingly spending on travelling due to the higher amounts of disposable incomes. And the Gulf carriers are no different.
Indian carriers are also increasingly vying for investments from foreign entitites as they seek to break out of a rut they have been stuck in for a while. That of not making large profits and being bogged down by limited bilateral relations that restrict the number of flights they can operate outside the country. And if Jet Airways can sell a stake, one cannot disregard the smaller fish in the sea.
How all this will play out eventually is difficult to determine. The Indian market has increasingly been opening up for foreign investors and despite the demonstrations and protests from the small-scale industries, the government is letting in big retailers set up shop in the country. Some argue that the Indian market is big enough for everyone to make a profit and that traditional models of shopping will ensure that the smaller retailers are protected in the long run. Further, there seems to be proof that the Indian customer prefers to buy at the local store rather than walk into the impersonal department store. But this will not necessarily transfer over to the aviaition industry.
When it comes to flying, most people are looking for only one thing and that is a low priced-ticket. Loyalty models have been changing constantly as we have discussed on the pages of this magazine and customers are looking for the most bang for their buck. This could mean that Indian travellers start to choose those airlines which offer them a better deal when flying internationally. This is where the Gulf carriers come in.
Qatar Airways, Emirates Airline and Air Arabia are all interested in alliances with either IndiGo or GoAir. There are also talks about something with SpiceJet. When and if these deals go through, they will prove fruitful for both parties involved. For the low-cost carriers in India, this will mean access to international destinations which would otherwise be out of their reach.
We are witnessing an interesting time for the aviation sector in the region. Aviation experts are recoining the ‘MENA’ term and calling it ‘MENASA’ to include the Middle East, North Africa and South Asia. This is where the future might be.