Tata, Singapore Air may pick up stake in Air India
FLIGHT PATH Aviation min had been asked to look at ways of privatising AI
Tata Group may be considering buying a stake in Air India Ltd together with Singapore Airlines Ltd as the government gets ready to decide on the fate of the flag carrier, a person familiar with the matter said.
“Its a possibility,” this person who did not wished to be named said elaborating on why it may be so, “You sign the cheque and from the very next day imagine the clout you have in the subcontinent, deep into Europe and US”
Finance minister Arun Jaitely has asked aviation ministry to look at possible ways of privatising Air India, he said on June 1.
Tata and Singapore Airlines launched Vistara in 2015 which goes international next year and will require hundreds of crores capital investment for that kind of expansion.
Tata spokesperson said it does not “comment on such matters”.
Singapore Airlines said it would “prefer not to comment on speculations.”
To be sure it is not certain the government will go ahead finally with the ongoing “privatisation process” or that Tatas will take over the airline at all.
Still, since 1st June a committee of secretaries which includes aviation secretary RN Choubey has sent its views on Air India to Department of Investment and Public Asset Management (DIPAM), said a aviation ministry official who did not wished to be named.
The cabinet note by DIPAM will have to be approved by Union Cabinet led by Prime Minister Narendra Modi.
Once the cabinet gives this in-principle approval the next steps of how much stake can be sold and what will be the best route forward will be decided.
“We are far from the stage you are talking,” this ministry official said referring to Air India sell -off.
The Union Cabinet is expected to meet on Thursday but it is not clear if Air India privatisation could be part of the agenda.
Finance minister Jaitley is on a three day visit to Russia to boost defence ties.
Choubey, who has been part of the key deliberations including those related to Air India’s assets valuation, is in Paris this week for the ongoing Paris Air Show.
The person quoted above outlined three key reasons for Tata’s interest in the airline.
First, chairman emeritus Ratan Tata has always wanted Tata group’s presence in aviation. He was also present at the ongoing Paris Air Show for the signing of a deal to build F-16 fighter jets in India with Lockheed Martin. Tata, himself a pilot, had flown the F-16 in 2007 a the Bangalore air show.
Air India was launched in 1932 by Tata group’s JRD Tata as Tata Airlines International. The government decided to take it over later.
Secondly, Tata’s Vistara is on the lookout for bigger planes to fly international next year - all of which are with Air India. Vistara has still not announced its proposed wide body fleet order.
Thirdly, Air India will give unmatched network depth to Singapore Airlines which itself is under pressure from local airlines like Thai Airways and Cathay Pacific besides Middle Eastern giants like Emirates. European carriers are shedding their inhibitions towards Middle Eastern airlines and aligning with them.
“Singapore Airlines will become a very strong carrier if this happens,” this person said adding the group will look for a majority stake and hair cut in debt and accumulated losses.
Last year, when their efforts to take Vistara international by seeking relaxations in rules was being opposed by rival airlines Tatas had said made their interests amply clear.
“We are the pioneers in the space and we are having to... (fight it out),” Mukund Rajan,board member of Vistara had said as Mint reported on March 30, 2016, “We don’t need a certificate from anybody to tell us whether we have a right to belong here or not. If anyone has a right to be in aviation, it’s Tatas.”