Air India to be sold

A notification announcing modalities for sale of loss-making national carrier Air India is likely to be announced next week, followed by release of Expression of Interest (EoI) document in second week of April next month.

“The process of privatisation of Air India and five of its subsidiaries is gradually shaping up and the government is likely to announce notification regarding sale modalities by next week,” Civil Aviation Ministry sources said.

Air India has been struggling on the back of operational inefficiencies, high employee cost and high level of net debt (Rs 54,715 crore) incurring huge losses for long.

The provatisation process also includes five of Air India’s subsidiaries – Air India Engineering Services, Air India Air Transport Services, Air India Charter Limited, Airline Allied Services and Hotel Corporation of India.

The government is likely to retain 24 percent stake in Air India, the notification may also provide clarity on debt to be transferred to a Special Purpose Vehicle (SPV), the source said.
The process began speeding up soon after Commerce Minster Suresh Prabhu took additional charge of the Ministry last week following resignation of G Ganpati Raju.

Earlier, the government had allowed 49 percent foreign investment in Air India.

To expedite the disinvestment process, the government is expected to widen the universe of bidders thereby making disinvestment easier and faster.

A consortium of three airlines: Jet Airways, Air France – KLM and Delta Airlines have already submitted an expression of interest in acquiring debt-ridden Air India. Before this, the government has received interest from IndiGo, a low-cost leading domestic airline, and an unidentified foreign airline.

Indian aviation industry registered double-digit growth in domestic passenger for last 42 months and the trend continues with the industry witnessing 19.9 percent (YoY) growth in January 2018.
There are many reasons for the world aviation players eyeing on acquisition of the Air India as it has domestic passenger market share of around 13.3 percent and international traffic share of 44 percent. Acquiring the airline would give immediate access to high-growth Indian markets.
Air India will also strengthen its partners’ reach and give access to highly coveted prime slots on the foreign soil. Reportedly, Air India has eight pair of slots at London Heathrow (LHR) and some others airports in the USA and Europe.

The buyer will get access to aircraft parking, hangars facility in most of the important domestic and international airports.

Air India has been a trendsetter. The Dubai-based airline Emirates took 22 years to reach where it is today. Air India was Asia’s number one within 15 years of its launch.

Air India at present has a fleet of 118 aircrafts. Its units Air India Express and Air Alliance have another 38.

Air India has some of the wealthiest real estate in some of the posh addresses of the world. From its office near Champs -Élysées in Paris, to the one in New York, or the office in London’s Bond Street.

In fact, the Indian embassy in London is based in Air India’s property. And in Japan, the airline’s office covers three floors in a building that is in one of the costliest business districts in the world.


Savio Rodrigues

Savio Rodrigues Founder & Editor-in-Chief

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