British Airways & IndiGo in potential alliance talks-172

Potential for expanding into India market

A report in the Wall St Journal has suggested that British Airways has been in talks with Indian budget airline IndiGo about a possible alliance. India is a key market for British Airways and, with the near collapse of Kingfisher Airlines, it now needs a new partner if it is to fully take advantage of one of the world’s largest potential markets. British Airways already flies direct to Delhi, Mumbai, Hyderabad, Chennai & Bangalore and having a strong, local partner would allow it to serve smaller, secondary destinations which cannot justify their own dedicated flights from the UK. ┬áIn return, IndiGo would have access to British Airways route network into Heathrow and beyond.

IndiGo

Talk of an alliance follows the long-awaited decision by the Indian government to allow foreign airlines to take a stake of up to 49% in Indian airlines. The same article reports that IndiGo president Aditya Gosh has denied any plans to sell a stake in the airline although he failed to confirm or deny that talks had taken place about a more general alliance. With finances in aviation always tight, common sense would suggest that IAG (the parent company of British Airways) has little to gain from taking a stake in IndiGo, other perhaps than preventing anyone else from getting too close.

In this respect British Airways may not be entirely misguided. While the brand remains popular in both countries, and lack of slots at Heathrow precludes much in the way of direct competition, British Airways is struggling to compete with Gulf carriers such as Emirates who are able to fly huge numbers of passengers from all over the UK to Dubai and then connect to both primary and secondary destinations within India. Whether these Gulf carriers want to go even further and invest in local carriers cannot be ruled out and, unlike their European counterparts, they have the funds to do so.

 

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