Local Airlines Nudged to Invest in Air Mauritius

Time of India

a day ago

The Centre has asked carriers to consider a
strategic investment
in
Air Mauritius
, the financially strapped national carrier of the African island nation, people aware of the development said. The nudge from the government comes as that airline battles a
financial crisis
, with a negative equity of $237 million (₹2,035 crore).
A government official said the move came after the ministry of external affairs got a request from the Mauritian government for a potential strategic investment. It also asked for an increase in flights by Indian carriers to its capital, Port Louis, the person said.
'To cut losses, Air Mauritius has restructured its network, as part of which it significantly cut flights to India,' the official said. 'Indian carriers have been asked to launch more flights to cover the shortfall. The airline is also seeking to raise funding by selling equity, so
Indian airlines
are being requested to consider that, (but) only if it suits their business interest.'
Airport Holdings (AHL), controlled by the Government of Mauritius, has a 99% stake in the airline. AHL recently converted ₹1,500 crore of debt into equity as part of the carrier's financial restructuring.
Earlier this year, Mauritius Prime Minister Navin Ramgoolam said the carrier was technically insolvent, casting doubt over its future.
The airline, which earlier operated two weekly flights between Port Louis and Delhi, had considered axing them but then decided to reduce it to one a week, while increasing fares significantly. Spokespersons of the ministry of civil aviation and Air Mauritius didn't respond to queries on the topic.
Indian airline executives said they are unlikely to be interested in investing in a market that's not a significant source of passengers for them. Besides, they are in the midst of executing their own ambitious expansion plans.
Prime Minister Narendra Modi was chief guest at Mauritius' National Day celebrations earlier this year. During his visit, Ramgoolam asked Indian investors to explore opportunities in the island nation, underlining that their participation is 'vital' for its economic growth.
Last year, India built an airstrip and a jetty at Agaléga island in that country. Air India held about 8% of Air Mauritius before the former was privatised in 2022.
Experts said Mauritius is of strategic interest to India due to its location on the maritime routes of the Western Indian Ocean Region (WIOR). Geopolitical competition over the region has intensified. China has a military base in Djibouti and extended its engagement with and presence in Mauritius and other island nations, according to Samir Bhattacharya, associate fellow at Observer Research Foundation.
'Given its diplomatic, cultural and commercial connections in the region, India considers the WIOR a part of its extended neighbourhood,' he wrote recently. 'Despite geographically being part of Africa, New Delhi categorises both Mauritius and the Seychelles under the Indian Ocean Region division, alongside more proximate states such as Sri Lanka and the Maldives. India is therefore keen to safeguard its influence against Beijing in this region.'
While Mauritius is geographically well positioned to attract transit traffic between Africa and Asia, a fast-growing market, competition has surged. That's made it difficult for Air Mauritius to succeed at developing a new east-west hub while maintaining profitability.
Since Air India absorbed Vistara last November, the airline has increased flights, managing to win a portion of the traffic from Air Mauritius while IndiGo continues to capture a significant share of that market. Additionally, Middle East carriers such as Emirates have a strong presence on the route.