Flagship carrier Air India is exploring a strategic alliance or an equity stake in Serbia’s national carrier Jugoslavenski Aerotransport (JAT), an official said on Monday.
“Discussions are on for a joint venture. We are also exploring the possibility of buying a stake in JAT,” said Air India executive director (public relations) S. Venkat. State-run Air India was exchanging data including traffic and looking at valuations and profitability, he added.
Due diligence was likely to be completed by June-end following several months of talks before a final decision on a bid is taken in consultation with civil aviation ministry officials, airline officials said. “We are seeing congestion across most of the key European airports we operate at. A Belgrade presence will offer strategic growth opportunities at this stage,” Venkat said.
If Air India decides to bid for JAT, it can expect fierce competition from Russia’s Aeroflot, according to media reports.
Air India and domestic carrier Indian are set to merge operations next month.
Air travel in India is booming and the number of airlines has risen to 10 from three in just four years. Average fares have fallen by two-thirds, squeezing profitability. India’s airlines posted a collective loss estimated at $500 million (Rs2,000 crore) in the year ended March.
Air India, with a fleet size of 47 aircraft, last year ordered 68 passenger jets from US aerospace giant Boeing for nearly $11 billion.
JAT currently operates 10 Boeing 737-200s, which are 25 years old and four propeller-driven ATRs.