IndiGo in­ter­ested in in buy­ing stake in AI

Air­line also wishes to take over AI Ex­press

Hindustan Times (Bathinda) - - PUNJAB - HT Cor­re­spon­dent feed­back@livemint.com n

NEW DELHI: In­dia’s big­gest bud­get air­line, Indigo, has ex­pressed un­so­licited in­ter­est in Air In­dia Ltd, be­com­ing the first suitor to toss its hat in the ring af­ter the Union cab­i­net ap­proved a pro­posal to pri­va­tise the air­line.

The air­line that op­er­ates more than 900 flights daily to destinations in In­dia and overseas sent in its in­ter­est on Wed­nes­day.

NEWDELHI: IndiGo, In­dia’s big­gest bud­get air­line, has ex­pressed un­so­licited in­ter­est in Air In­dia Ltd, be­com­ing the first suitor to toss its hat in the ring af­ter the fed­eral cab­i­net ap­proved a pro­posal to pri­va­tise the sta­te­owned air­line.

IndiGo, op­er­ated by In­terGlobe Avi­a­tion Ltd, sent in its in­ter­est late Wed­nes­day night, min­is­ter of state for civil avi­a­tion Jayant Sinha said. It came within hours of the cab­i­net ap­prov­ing the pri­vati­sa­tion of Air In­dia and five of its sub­sidiaries.

“The first for­mal ex­pres­sion of in­ter­est has been re­ceived from IndiGo,” Sinha said, adding that other play­ers, in­clud­ing some in­ter­na­tional ones, have also shown in­ter­est in Air In­dia. He didn’t name any of the oth­ers, which have re­quested that their names be kept con­fi­den­tial.

Ac­cord­ing to avi­a­tion sec­re­tary RN Choubey, IndiGo said it was ex­press­ing its in­ter­est in Air In­dia based on the cab­i­net de­ci­sion to pri­va­tise the air­line.

To­gether with the let­ter, IndiGo in­cluded a small pre­sen­ta­tion show­cas­ing its mar­ket, net­work and fleet ex­pan­sion plans, said a gov­ern­ment of­fi­cial, who has seen the let­ter and de­clined to be named.

IndiGo wants to take over the in­ter­na­tional op­er­a­tions of Air In­dia and its af­fil­i­ate Air In­dia Ex­press, but will also be open to buy its do­mes­tic op­er­a­tions, the air­line said in its let­ter, this per­son said.

Avi­a­tion sec­re­tary Choubey said IndiGo will have to ap­ply when the ten­ders are floated.

Asked if anti-trust is­sues could arise should a trans­ac­tion take place, he replied, “Monopoly it­self is not a is­sue but it is the abuse of mar­ket dom­i­nance. That falls un­der the purview of CCI (Com­pe­ti­tion Com­mis­sion of In­dia).” IndiGo con­trols about 40% of the do­mes­tic mar­ket and about 3% of the in­ter­na­tional mar­ket, with 136 planes.

Air In­dia has the largest do­mes­tic and long-haul fleet of 140 planes in the coun­try and flies to nearly 41 in­ter­na­tional and 72 do­mes­tic destinations.

The car­rier has a do­mes­tic mar­ket share of 14% and a share of 17% on in­ter­na­tional routes out of In­dia.

An IndiGo of­fi­cial who de­clined to be named said it had sent the let­ter to the min­istry. The air­line’s spokesman said the com­pany was in a silent pe­riod, with­out say­ing why, and hence could not com­ment.

The gov­ern­ment of­fi­cial quoted above said the avi­a­tion min­istry had been sur­prised by IndiGo’s let­ter.

Spokesper­sons for Tata Sons Ltd, which is a part­ner in two air­line ven­tures, SpiceJet Ltd, Go Air­lines (In­dia) Ltd, Jet Air­ways In­dia Ltd and Qatar Air­ways Ltd, which has pre­vi­ously ex­pressed in­ter­est in en­ter­ing the In­dian mar­ket, de­clined to com­ment on po­ten­tial in­ter­est in Air In­dia.

The min­istry said a work­ing group of min­is­ters was be­ing cre­ated which will sub­mit its fi­nal rec­om­men­da­tions.

The group un­der fi­nance min­is­ter Arun Jait­ley will de­cide on the treat­ment of un­sus­tain­able debt of Air In­dia, hiv­ing off cer­tain as­sets to a shell com­pany, spin­ning off and sell­ing stakes in three profit-mak­ing sub­sidiaries, the quan­tum of dis­in­vest­ment, and the el­i­gi­bil­ity cri­te­ria for the bid­ders, the min­istry said in a state­ment.

Avi­a­tion min­istry Ashok Ga­jap­athi Raju said on Thurs­day that the air­line’s name has a sen­ti­men­tal value and the min­istry would look at how to pre­serve it.

“Air In­dia is at­trac­tive to any­one who has a se­ri­ous and longterm in­ter­est in the fast-grow­ing In­dian avi­a­tion mar­ket, sub­ject to the In­dian gov­ern­ment ex­e­cut­ing the di­vest­ment deal in a thor­ough and metic­u­lous man­ner and af­ter giv­ing clear de­ci­sions on Air In­dia em­ploy­ees, Air In­dia debt and eq­uity po­si­tion and bi­lat­er­als,” said Am­rit Pan­durangi, for­merly the head of Deloitte Touche Tohmatsu In­dia LLP’s avi­a­tion prac­tice.

PTI/FILE

Air In­dia has the largest do­mes­tic and long­haul fleet of 140 planes in the coun­try

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