Two Middle East airlines are set to battle it out on who gains the most out of one of the fastest-growing markets in the world, India. Reports indicate that Qatar Airways will announce a codeshare agreement with IndiGo, the biggest airline in the South Asia country, while Etihad, partnered with Air Arabia, is looking to establish a new low-cost carrier to make use of Etihad’s slots acquired when Jet Airways, a former partner in business, closed its doors for good.

For the two Middle East airlines, the move is important – for different reasons, both are not exactly living in their Golden Ages. Etihad reported a net loss of $1.28 billion in 2018, while Qatar Airways announced very frugal results in FY2019 – a loss of $639 million. While the former suffered a lot of financial damage due to failed investments in several airlines, including airberlin and the aforementioned Jet Airways, the latter is operating under a blockade of airspace in the region, massively increasing Qatar Airways’ expenses bill.

Nevertheless, the message is clear – as India’s market is set to grow over the coming years, the two carriers are looking to make a move into the country and strengthen their commercial positions there.

Middle East – India connections

For the past few years, international traffic has been growing steadily in India. Throughout 2015-2016, the total international traffic amounted to 49.7 million; in 2016-2017 it was 54.6 million and the latest data indicates that in 2017-2018, 60.5 million international passengers landed or departed from India’s airports. Going further back, international traffic has not stopped growing since 2004-2005, according to data provided by the Directorate General of Civil Aviation (DGCA) in India.

Looking at country-specific statistics, DGCA data indicates that the United Arab Emirates (UAE) is by far the biggest international market:

In Q1 2019, 28.7% of passengers either landed or flew to UAE, while traffic to Qatar amounted to 5.3%. In Q1 2018, UAE’s share was 30.2%, while Qatar’s was 5.5%. Similarly, in Q1 2017, UAE traffic was 33.2%, while Qatar’s was 5.1%.

However, most of this traffic is served by India-registered airlines. The biggest foreign carrier in terms of international traffic market share was Emirates, with 8.8% of the market. Qatar Airways transferred 3% of international passengers to and from India, while Etihad is not present on the top ten airline list in Q1 2019.

There is a reason for such an amount of traffic and attention to the Indian market. Both Qatar and the United Arab Emirates have very big Indian expatriate communities: over 700,000 Indians live in Qatar (21.8% of total population), while over 2.6 million Indian expatriates reside in the United Arab Emirates (27.4% of total population), according to data.

Serving these communities is a huge business opportunity for airlines and both Etihad and Qatar Airways have made previous attempts to establish themselves in the air corridor between India and the Middle East.

Etihad’s investments

The Abu Dhabi-based airline had a 24% in the now-bankrupt Jet Airways, which has been on the brink of collapse much throughout 2019. For Etihad, the final result of the Jet Airways crisis was that it has an abundance of slots in India – reports by Bloomberg indicate that the number of slots currently held by Etihad is 100.

And the plan to make use of those slots is to establish a new low-cost carrier that will focus on flights between India and Abu Dhabi, with Air Arabia dedicating the most crucial resource to the project – around 70 aircraft out of more than 100 jets the low-cost carrier plans to order. A decision on what type of aircraft to order is set to be announced by January 2020, reports Reuters.