Qatar Airways rethinks Indian plans due to foreign ownership rules

By Aditi Shah

NEW DELHI (Reuters) - Qatar Airways is reviewing plans for its own domestic Indian airline due to "confusing" foreign ownership rules and could work with a partner in India or take a stake in IndiGo instead, its chief executive said on Tuesday.

The state-owned Gulf carrier has long coveted the Indian aviation market, which is the fastest growing in the world, and in 2017 said it would set up a domestic airline, a year after India eased foreign investment rules for the sector.

"We are really very interested to launch an airline in India, but the regulation is a little bit confusing to us," Qatar Airways CEO Akbar al-Baker told reporters in New Delhi.

India now allows 100 percent ownership of India-based airlines, up from 49 percent, but only with government approval. Meanwhile, foreign airlines continue to be limited to 49 percent ownership.

Qatar Airways planned to own a minority stake of the domestic airline with sovereign wealth fund Qatar Investment Authority (QIA) being the majority owner.

However, enquiries to start the application process in India were rejected over QIA's ownership of Qatar Airways, Baker said.

"We really don't know what is allowed," he said.

Qatar Airways could now work with an Indian partner for the domestic airline or alternatively seek a 15 to 25 percent stake in low cost airline IndiGo. If both of those failed then the airline would have to forget about the domestic market, Baker said.

Qatar Airways has been interested in investing in IndiGo for several years, though never bought into the airline.

Qatar Airways would be interested in buying Air India which the government wants to sell a 76 percent stake in, Baker said, adding it would only want the core airline assets and not other parts of the business such as ground handling services.

Any bid for Air India would be dependent on working with a strong Indian partner, Baker said, adding that the airline's debt was not an issue. India wants to offload about $5.1 billion of Air India's debt.

"The (Air India) debt can be taken and restructured. The issue is with whom we will partner."

Qatar Airways expects to release its annual results in two weeks time, Baker said. He has previously said the airline made a "substantial" loss, which it blamed on a regional dispute that has banned the airline from four Arab countries.

(Reporting by Aditi Shah; writing by Alexander Cornwell; editing by Alexander Smith)