Emirates not keen on stake in domestic carrier

Emirates, the world’s biggest airline by international traffic, aims to take advantage of India’s growing market for air travel by increasing flights rather than taking a stake in a local carrier in the event that investment rules change. Indian regulations currently bar foreign airlines from investing in domestic airlines but the civil aviation ministry has proposed that a 25% stake be allowed. “I don’t think we have thought of buying a stake in Indian airlines right now,” Majid Al Mualla, Emirates’ senior vice-president, West Asia and Indian Ocean, said in a phone interview from Dubai, where the carrier is based. “As a growing company, we haven’t reached a saturated mark where we see a need to take a stake in other airlines.” His view runs counter to that of Willie Walsh, chief executive officer of British Airways Plc, who said in a 5 September interview that his company would be keen to buy a stake in an Indian carrier if rules change. An analyst said Emirates shying away from investments may be a result of its experiences in the past. “Emirates must recall the troubled history of its SriLankan investment, so I am not surprised they prefer to pursue organic expansion opportunities,” said Vikram Krishnan, associate partner at Oliver Wyman, a San Francisco-based aviation consultancy firm, in emailed comments. European carriers such as British Airways and Lufthansa compete with West Asia-based airlines such as Emirates in the Indian travel market. They have chosen to increase cooperation with Indian carriers over the past few years. For example, British Airways sponsored Kingfisher Airlines’ entry into the OneWorld alliance this year, while Lufthansa backed Air India’s entry into Star Alliance a few years ago. Al Mualla said 78 Airbus A380s will join Emirates’ fleet of 150 aircraft over the next few years and it will use these to expand into the Indian market and elsewhere. The carrier’s 12 double-decker A380s, with private suites, shower spas and lounges for premium class passengers, fly to London, Manchester, Paris, Sydney, Auckland, Toronto, Bangkok, Seoul, Jeddah and Beijing. Hong Kong and New York are the next A380 destinations on the cards, the airline said. Since the carrier has used up all its seat entitlements, it will wait for additional rights to start new flights to India, Al Mualla said. The civil aviation ministry is not keen to offer fresh bilateral rights right away after a five-year period that ended 2008, during which such entitlements were easily granted, according to a ministry official. Emirates, which says it has 10,400 Indians among 50,000 employees, including 900 in the country in 10 different cities, plans to consolidate and focus on its current offerings. It will open two new airport lounges for business and first class passengers in Delhi and another airport that’s yet to be decided, adding to 25 such lounges at various airports. The carrier also plans to upgrade its Mumbai- based call centre operations to a global hub connected with its Dubai and London call centers this year and add 90 workers to the existing 400. The Centre for Asia Pacific Aviation estimates foreign carriers are offering services to an increasingly diverse range of Indian cities, providing global connections via their respective hubs. “The Gulf carriers in particular have a very strong presence, as seen by the 23% share of capacity they command,” the consultancy noted in its report last year. “Indian carriers currently

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The above article was extracted from Skyline updates of Skyline College. Skyline College is amongst the top MBA and BBA institutes in Delhi, Gurgaon (NCR).