Air Costa (Vijayawada) is said to be in talks with Qatar Airways (QR, Doha Hamad International) concerning the possible sale of equity in the Indian domestic operator.
Airline sources told India's BusinessLine this week that top management officials had headed to Doha in Qatar to negotiate the deal. Air Costa is reportedly angling to sell a 26% stake but could settle for more if the price is right.
Qatar Airways had not responded for comment at the time of going to press.
Air Costa is South India's first privately-owned regional airline with its parent firm the Vijayawada-based LEPL Group conglomerate. It currently operates a modest fleet of three E190s, all leased from GECAS, on regular flights to nine cities in southern as well as northwestern India.
Having recently been given regulatory approval to expand its operations throughout India, Air Costa now plans to link more underserved markets with more additional metropolitan areas, as well as other secondary and tertiary business centres. To aid its growth plans, Air Costa has twenty-five EMB190-E2s and twenty-five EMB195-E2s on order from Embraer (EMB, São José dos Campos Professor Urbano Ernesto Stumpf).
Qatar Airways has long expressed a desire to gain a foothold into the lucrative Indian market. Though CEO Akbar al Baker has named IndiGo Airlines (6E, Delhi International) as a preferred partner in the past, despite the LCC's successful IPO last year, Qatar Airways has yet to formally pursue a shareholding.
In a bid to help foster growth in the local airline sector, Prime Minister Narendra Modi's government this year increased the cap on Foreign Direct Investment (FDI) in Indian carriers from the previous 49% to 100%.
Foreign entities, with the exception of foreign airlines, are now allowed to own 100% of the shareholding of Indian airlines albeit with government approval. Foreign airlines' ownership is still capped at 49%.
