Waiting for a surprise bidder
Is the Tata group looking to add a third airline in its stable?
The government machinery has been busy over the past couple of weeks. While events showcasing achievements for four years of the NDA government took ministers and bureaucrats to remote corners of the country, the message of “saaf niyat, sahi vikas” (good intention, right development) is playing out almost as an election bugle for 2019. Anything from the PMO website to public outreach platform mygov.in, “48 months of transforming India” along with the tagline of “saaf niyat…” is aimed to catch public attention, reminiscent of “ab ki baar, Modi sarkar” ahead of the 2014 General Elections.
But that’s only one part of the story why the government has been so busy. Many of the movers and shakers have also been engrossed in another important business. To generate interest in Air India which is on the block. With the May 31 deadline for expression of interest (EoI), unless the date is extended, Air India divestment is a test coming soon after the four-year celebrations. And nobody is in a mood to fail the test.
For long, the question around the proposed disinvestment of Air India has been, is it on, or is it off? But this is action time. Phones are being worked on, charter flights are being booked and crack teams are at work. Although the likely frontrunners (remember the enthusiastic Indigo?) backed out one by one, the Tata group—already with two airline companies Vistara and AirAsia—didn’t say no. Not surprising then that the buzz in the corridors of power has been growing louder that Tatas are preparing to put in their EoI, perhaps on the last day. A person who usually has his ears to the ground said, “there’s some action on that front”, referring to the Tatas, who’ve had an old association with Air India. But won’t the CBI FIR against AirAsia change things? To that, the official quoted earlier admitted the timing was rather odd but ruled out any connection with Air India disinvestment. “Cops act differently...”, is all he would say.
An investment banker, who is usually in the know of such deals, believes it makes a lot of sense for any serious player (like the Tata group) to buy Air India, though the government conditions are not good enough to attract investors. While the countdown has begun and the government hopes there would be multiple players queueing up to bid (there has to be at least two bids for the process to work), for now every movement across the government and business is being watched with interest. For instance, PM Modi will meet his Malaysian counterpart Mahathir Mohamad on May 31. So there’s curiosity on whether discussions will revolve around Malaysia-based AirAsia, which is currently under CBI probe. And will that have an impact on Air India bidding if Tatas were to go for it? On the last date for submitting EoIs, the PM will be in Singapore where he would engage with businesses and local community for two days. Around 20 CEOs of Singapore including the Singapore Airlines chief are expected to meet Modi. Will there be any talk on Air India especially since Singapore Airlines had earlier stated it had an open mind on India’s national carrier?
Not just now, the build-up to the Air India sale has been full of contrasting action, and plenty of it in Parliament. In March 2017, replying to a Lok Sabha question, then aviation minister Ashok Gajapathi Raju said there was no question of any talks with strategic partners. He was replying to a question on whether the government proposes to sell a majority stake in Air India to a strategic partner and whether the government has held discussions with strategic investors in this regard. On whether a detailed inter-ministerial discussion had been sought to avoid a situation where there are no buyers after the offer is announced, the reply was, “(the question) does not arise”.
A few months later, in December 2017, Raju said the government does not want Air India to become defunct like Kingfisher Airlines and wanted it to serve the nation. In January 2018, minister of state for civil aviation Jayant Sinha stated there is no proposal to reconsider the decision to privatise Air India. “To revive the lossmaking national carrier, the government is working on the modalities for its strategic disinvestment.”
Cut to May 22, 2018. Civil aviation secretary R N Choubey said the government wouldn’t sell Air India if the bidding price is found to be inadequate. By this time, despite all the hard work in the government, Air India had started looking like a lacklustre show. But who knows, there are surprises all the time.