Starting local airline in India would be a misadventure, says Lufthansa

Deutsche Lufthansa AG, the largest German airline, had said that starting a domestic airline in India, which is world's fastest growing aviation market, will be a "misadventure" for the Cologne-headquartered airlines. The company has said so because of high jet fuel taxes and the cost of operations in Indian aviation market.

In the past few weeks, Qatar Airways Ltd. has announced its plans to start an airline in India with a fleet of 100 planes. Other than that, Singapore Airlines Ltd., Etihad Airways PJSC and AirAsia Bhd. have also bought stakes in India’s local carriers, thanks to the newfound love for flying by India’s emerging middle-class.

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"You only go make business when you have business plans which give you hope that you can be very successful," said Wolfgang Will, a senior director for South Asia at Lufthansa. "And I did not hear up to now of any domestic airline in India making a lot of profit."

Lufthansa was earlier part of a partnership that ran ModiLuft, which stopped operations in 1996 after disputes over payments with the German carrier, creditors, oil companies and the Airports Authority of India. Its permit was later used by two entrepreneurs, which started SpiceJet Ltd., which has since become India's second-largest airlines.

Even though India’s aviation market is rapidly growing, it’s marred by some of the world's costliest jet fuel, the main reason of which could be provincial taxes of as much as 30%, along with a cut-throat competition resulting in low-cost tickets and lesser profits.

Aviation turbine fuel in India costs 70% more in India than abroad, which has resulted in as many as 17 airlines closing down in the past two decades.

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