Wednesday, August 30, 2017

Air India stake sale: One more bidder likely, the Bird group, but keen only on ground handling biz

Two separate interested bidders could snap up two different parts of state-owned Air India (AI), which the government wants to put up for disinvestment. India’s largest airline by passengers, IndiGo, has already said it would be keen primarily on the international business of the ailing Air India and would additionally have a reluctant interest if AI’s domestic business also comes along in a package.

Today, Civil Aviation Secretary R N Choubey said there is a second potential bidder – the Bird Group. Sources said the Bird Group is interested only in the ground handling business of Air India. The Group of Ministers, headed by Finance Minister Arun Jaitley, which was constituted to finalise the modalities of the Air India disinvestment, is slated to meet this evening.

Why are interested parties showing their keenness for only certain parts of Air India? Well, the core airline business is flanked by five different subsidiaries – Air India Express, Alliance Air, Hotel Corporation of India, AIATSL and AIESL. The Air India we know today is a loss making behemoth, with a mountain of debt and a large employee base. Potential bidders are looking to purchase parts of the airline which best suit their existing businesses or future growth ambitions.
IndiGo is keen on Air India’s international operations since it is preparing to launch low cost international long haul operations and the existing infrastructure of Air India would prove to be an asset.

The Bird Group is probably looking for the ground handling subsidiary of Air India to enhance its own ground handling services.

As per the group’s website, Bird Worldwide Flight Services (BWFS) is the first private, third-party ground handling company at the Indira Gandhi International Airport (IGIA), New Delhi. It is also the sole licensed private third party ground handling company at Cochin International Airport. It handles 700+ international and domestic flights per month at Delhi and Cochin.

Why Air India Air Transport Services (AIATSL) would be a fit is obvious: As per the AIATSL annual report for 2014-15 (the last such document available), it was providing ground handling services at 63 airports. Apart from handling 86,837 flights of Air India and its subsidiaries, ground handling is also provided for 27,270 flights of 30 foreign airlines, 4 domestic airlines, HAJ and Charter/Non-Scheduled flights.
30/08/17 Sindhu Bhattacharya/First Post