British Airways' (BA) multi-million pound takeover plan of India's domestic carrier Go Air, has got derailed and the Europe's leading carrier may now negotiate for a marketing alliance instead, a media report says.
"British Airways planned an audacious, multi-million pound takeover of one of India's leading airlines - but the scheme was derailed by problems with industry-ownership laws," The Sunday Times today reported.
However, the daily said: "It is understood BA may negotiate a marketing alliance with Go Air instead, with the Indian airline using BA flight codes on its domestic network."
Quoting senior industry sources, The Sunday Times said: "BA wanted to take a controlling or significant minority share, and was ready to pay up to $600 million for the stake."
As the commercial aviation sector in India has tough rules preventing foreign nationals from owning or taking control of airlines, BA aimed to get round the restrictions by setting up an Indian intermediary company to hold its investment in Go Air, the newspaper said.
The current foreign direct investment policy of India does not allow foreign carriers to hold equity, directly or indirectly, in domestic airlines.
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BA's decision to pursue an Indian tie-up has piqued the interest of rival airline executives, who have been focused on the stuttering progress of its planned merger with Spain's flag carrier, Iberia, The Sunday Times said.
Quoting one rival airline executive, the daily said: "I think it indicates where they think the real future of the airline industry lies, and where their next deal might come from India or China."
BA has had franchise agreements with the South African carrier Comair, Glasgow-based Logan Air, Scandinavia's Sun Air and Kenya-based Regional Air.