Why are middle east airlines flocking to India

Gulf airlines attracted to 'generous' Indian govt.

The manner in which Abu Dhabi seems to be getting away with a sharp increase in seat sharing arrangement has got other countries in the Middle East interested. Despite an outcry on the way Abu Dhabi managed to increase its seat sharing arrangement with India using Etihad’s investment in Jet Airways as a vehicle, the deal seems to be moving ahead.Government seems too keen to bend the rules in order to bring in foreign direct investment (FDI), irrespective of the damage it does to other Indian players. 

Other countries now seem keen in using the same strategy to increase seat sharing arrangement. Picking up stake in loss making airline companies is only incidental. Spice Jet traded 8% higher on Monday on news that Kuwait Airlines is keen on picking up nearly 25% stake in the company. Though there was a denial issued by the company, share price remained high. 

 

Most of the airports and airline companies in the Middle East are state-owned. Their interests are thus aligned. Gulf countries attract the largest traffic from India, while some of it might be hop-over flights; the point is they are the hubs. Till recently Dubai, thanks to its airline Emirates, was the port of choice. Etihad however, has tilted the balance a bit. 
 

Fearing the change in equation and also to capatalise on the situation of Indian airlines and the ‘generous’ nature of Indian government, Gulf carriers like Emirates and Qatar apart from Kuwait are also planning to look at India with more interest. 

After Etihad ‘managed’ to get 36,670 more seats, Emirates is seeking about 24,000 more weekly seats while Qatar wants to double it says an Economic Times report. 
 

Indian airline companies are sitting on huge losses thanks to increased competition, low prices and a lopsided cost structures. While Kingfisher has gone bust trying to seek a partner, Jet has only recently ‘managed’ to get one. 



The Jet Airways-Etihad deal has shown that it is not the airline per se that is of interest to these foreign airlines but the slots at international airports and the port of call that these airline enjoys. In simple words, these airlines are looking at how to fill their own seats by throwing some crumbs at domestic players. They would like to keep the domestic players nose above the water, but that’s the maximum they would be willing to extend.
 

Jet-Etihad deal has also shown that the Middle East airline companies do not trust their Indian counterparts and would like to control the airline not only by having its own board members and members in key committees but also by relocating key functions to home country. 
 

One cannot blame these airlines alone as Indian government is more than keen on helping them while its own, Air India, is fighting for survival.