Air India disinvestment gets flight ready
Air India empire and, therefore, proposals for its five different subsidiaries are being received separately, and they will also go under the hammer separately, once the process of bidding begins.”
At least three entities, the Tata Group, the Bird Group, an aviation services provider, and InterGlobe Aviation, which operates the budget carrier IndiGo, have shown interest in buying stakes in the beleaguered staterun behemoth, which has seen its business shrink over the years due to decades of inefficiency and mismanagement.
Rajiv Nayan Choubey, Secretary, Ministry of Civil Aviation, had confirmed to The Sunday Guardian in August this year about the interest that IndiGo and the Bird Group had shown in Air India and its subsidiaries, but had not provided much detail at the time.
However, according to sources, IndiGo has expressed its interest in buying Air India’s international operations and its low-cost domestic operations. The Ministry of Civil Aviation has confirmed reports of IndiGo showing its interest in such operations, and the low cost carrier has also formally written to the ministry to place its bid once Air India is up for sale.
The Bird Group, on the other hand, is keen to acquire the Air India Air Transport Services Limited (AIATSL), one of Air India’s subsidiary companies, which primarily deals with transport and ground handling services at all airports.
According to sources in the ministry, recently, the Bird Group has sent a formal proposal to them, expressing its intention to bid for AIATSL. The Bird Group has been in the business of ground handling for a long time. Sources add that the Bird Group is also interested in acquiring stakes in Air India subsidiaries that deal with hotel and hospitality businesses, and will bid for the same once the bidding process is open.
The Tata Group, which already is in an alliance with Singapore Airlines and has been operating flights under the brand name “Vistara”, wants to acquire 51% of the operating stakes in Air India Limited. Sources say, this is because the Tatas want to expand their fleet size and start international operations soon.
Air India has also put up for sale, several of its prime properties in cities such as Mumbai, Bengaluru, Kolkata, Chennai, Lucknow, Goa and Pune, among others, through state-run auctioneer MSTC. However, its prime properties in Delhi have not yet been put up for sale.
The national carrier hopes to earn as much as Rs 500 crore through this process, but according to sources in Air India, only Rs 90 crore have been earned by the airline since September.
Air India, which has a huge number of aircraft, ground handling staff and engineering services, has been making enormous losses, running into thousands of crores of rupees every year and has been using taxpayer money through bailout packages of as much as Rs 20,000 crore, but to no avail. Even recently Air India sought a short term loan of Rs 1,500 crore to meet its “urgent” working capital needs.
In a meeting held in June this year, the Cabinet Committee on Economic Affairs (CCEA) had given “in-principle” approval for considering strategic disinvestment of Air India and its five subsidiaries under which the process of disinvestment of the airline has begun.