SpiceJet says approached by Gulf, Asian carriers

DUBAI — India’s SpiceJet has been approached by several Gulf-based and Southeast Asian airlines but will not jump into negotiations before the government reaches a crucial decision on foreign investment, its chief executive said on Wednesday.

By (Reuters)

Published: Fri 20 Apr 2012, 10:58 PM

Last updated: Tue 7 Apr 2015, 11:07 AM

“We have been approached by several Gulf and Southeast Asian airlines, all on a tentative basis,” Neil Mills, the loss-making budget carrier’s chief executive, told Reuters. India allows up to 49 per cent foreign investment in Indian carriers but bars foreign carriers from picking up stakes. But with most carriers suffering losses, the government is now mulling allowing foreign airlines to invest directly. India’s cabinet is expected to make a decision on Foreign Direct Investment, or FDI rules this week.

“There is nothing more serious than tentative talks to see if we are interested. We have said that we are interested in exploring any option for us that makes business sense but until a decision has been taken on FDI there is no point in taking it further,” Mills said in a telephone interview. “Once we get regulatory confirmation in place then we can see whether it makes sense to look at alternative funding options. We are just talking about a concept until the law is amended.”

He declined to name any of the airlines involved. Dubai’s Emirates airline said earlier this week it is studying new opportunities to buy foreign carriers if they fit the Gulf emirate’s strategy, adding that it is interested in an investment in India if carried out at the right price.India’s embattled carriers have long lobbied for looser foreign ownership rules.

Indian airlines are laden with $20 billion in debt and probably lost $2.5 billion in the fiscal year that ended in March, according to Centre for Asia Pacific Aviation, a consultancy.

Kingfisher, India’s second largest carrier by market share, is urgently seeking funds as it battles to stay afloat. Despite the turmoil, industry analysts say India represents a tempting prize for foreign airlines seeking access to its market of 1.3 billion people.

However questions have been raised over how much actual interest there would among international carriers for a stake in Indian airlines given its brutally competitive market.

Access to Indian airports is limited by the fact that most nations have used up their allotted traffic rights to India, whereas part-ownership of an Indian airline could allow them to take advantage of spare frequencies unused by India.

SpiceJet reported a net loss of Rs392.6 million($7.6 million) in the final quarter of 2011 compared with a profit of Rs944.5 million in the same period in 2010.

Talk of India’s potential and low traffic compared to its population stoked up a recent boom in airplane orders.

Mills raised doubts over whether all airlines would take full delivery of a backlog of hundreds of aircraft currently on order from Airbus and Boeing, but said he was not worried about his company’s own airplane order from Boeing.

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