Low cost carrier IndiGo and Qatar Airways may soon make a joint bid for Air India

There has been a lot of chatter going on about Qatar Airways entering the Indian domestic market with an airlines having at least 100 planes of its own.

While speculation has been swirling around, Qatar Airways recently reiterated its intentions to go ahead with their plans.

Meanwhile, the Indian government has been preparing to call for preliminary interest memorandum (PIM) along with expression of interest (EoI) from parties interested in gaining control of its national carrier — Air India.

Now, sources have said that low-cost carrier IndiGo is likely to make a bid for Air India along with Qatar Airways, in a consortium, according to Financial Express.

After the government announced its intentions to sell off Air India, IndiGo had expressed interest in buying the carrier. But they later confirmed that the first priority would be to buy the Air India’s overseas flights if the airlines’ domestic and international flights were sold as separate entities. However, it is understood that the government will make no such bifurcations.

Sources also clarified that the net worth criteria that bidders must meet is likely to be fixed at Rs 1,000 crore, calculated on the basis of an existing formula under the Companies Act, before they are allowed to put in bids and access the bid data room for Air India, according to Financial Express.

So, while the airlines bidding for Air India can have a negative net worth, at least one of the partners in the consortium must have to have a positive net worth.

“This means these airlines can come together and bid as a consortium with a private equity partner or a sovereign wealth fund,” said a source involved in the process of Air India divestment.

IndiGo’s net worth at the end of FY17 was Rs 3,779 crore ($583 million), while Qatar Airways had a net worth of $15.8bn at the end of FY16. Qatar has a fleet of 200 aircraft and flies to 150 destinations. It is part of the oneworld global alliance which gives it access to nearly 1,000 airports across the globe.

For IndiGo, acquiring Air India will be a game changer, giving it greater market dominance in domestic flights (the two airlines together account for more than a 50% share) and a ready platform to ramp up its international services with ready slots at some of the most coveted airports across the world and an enviable fleet of 68 wide body aircraft.

Meanwhile, Qatar Airways is actively looking to extend its operations outside the region by making relevant investments that will aid growth. They have also been looking to get a foothold in the Indian aviation market, and it has specifically expressed an interest in Indian budget carrier IndiGo on several occasions. A bid for Air India, could just offer that opportunity.