India's low-cost carrier, IndiGo is considering investing in Jet Airways if it fails to acquire a stake in Air India. With this move, the carrier aims to expand its international footprint, Mint reported.
InterGlobe Aviation-- the parent company of IndiGo-- run by aviation entrepreneurs Rahul Bhatia and Rakesh Gangwal, was the first to show interest in Air India on the same day the government decided to sell a stake.
IndiGo has a great chance to crack the Air India deal with new foreign direct investment (FDI) policy on aviation in sector in place. The new FDI policy says that rule allowing foreign airlines to invest up to 49 percent in an Indian airline does not apply to Air India, which rules out all the possibilities of a foreign airline buying into India's national carrier, the business daily reported.
A senior official, who was briefed on IndiGo's strategy, told Mint that the airline will take the organic route if it can't acquire a stake. But the process would be slower, he added.
Currently, the foreign airlines fly about 65 percent of international passengers in and out of India. The rest is mostly carried by the state-owned Air India and Jet Airways.
Given the circumstances, IndiGo would go all out to get Air India's international business as the state-owned carrier has international flying rights and slots, the official said.
Another alternative could be Jet Airways. IndiGo "sees an opportunity there" in a year, he said. Earlier in 2013, Jet sold 24 percent stake to Etihad.
In case, neither of the options work out, IndiGo would like to start international operation on its own by buying bigger planes from Airbus or Boeing. But that will be a "very slow process" and it will be the last resort for the airline, he said.
With a fleet of 139 planes, IndiGo is currently the largest domestic airline in India. To build managerial bandwidth IndiGo has roped in several experts from the US and other markets in departments such as finance, commercial, airports and flight operations.