Air India assets sale plan flies into choppy weather

GROUNDED: Air India has
been losing market share to
new low-cost private airlines
GROUNDED: Air India has been losing market share to new low-cost private airlines


JET Airways on Tuesday (10) became the latest major Indian airline to rule out a bid for debt-laden national carrier Air India in a new blow to the government’s privatisation plans.  

The announcement came just days after rival In­diGo pulled out of the race to acquire Air India’s operations, meaning the government now has no clear frontrunner in the sale campaign.  

“We welcome the government move to privatise Air India. It is a bold step,” Jet Airways’ deputy chief executive, Amit Agarwal said in a statement.  

“However, considering the terms of offer in the information memorandum and based on our re­view, we are not participating in the process.”  

Once the country’s monopoly airline, Air India has lost market share to new low-cost private players in one of the world’s fastest-growing airline markets.  

Air India ran losses for nearly a decade after a botched merger in 2007 and has debts of around $7.67 billion (£5.41bn) according to government fig­ures. It has received $5.8bn (£4bn) in bailout funds from the government but needs even more working capital to turn it around, experts say.  

The Indian government recently said it wanted to sell a 76 per cent chunk of the struggling carrier.  

It released bid documents on what would be one of the country’s highest-profile asset sales in dec­ades, showing it wants the prospective buyer to take on all of Air India’s operations.  

The documents said the proposed sale would in­clude a 100 per cent stake in Air India’s low-cost arm Air India Express, which operates in West Asia, and a 50 per cent stake in its ground-handling SATS Air­port Services.  

IndiGo, India’s largest airline, withdrew last Friday (6), saying it was interested only in Air India’s inter­national routes and not its domestic operations. “From day one, IndiGo has expressed its interest primarily in the acquisition of Air India’s interna­tional operations and Air India Express,” IndiGo president Aditya Ghosh said in the statement to the Bombay Stock Exchange.  

“However, that option is not available under the government’s current divestiture plans for Air India.  

“Also, as we have communicated before, we do not believe that we have the capability to take on the task of acquiring and successfully turning around all of Air India’s airline operations.”  

India has the world’s fastest-growing passenger airline industry, expanding at an annual rate of around 20 per cent. About 100 million of its 1.25 bil­lion people took to the skies in 2016 and airlines have embarked on huge purchases of new jets in expectation of new growth. (AFP)