Monday, September 25, 2017

Long flight path? Air India disinvestment hits air pocket due to lack of bidders

New Delhi: Last week Union Finance Minister Arun Jaitley, who heads the ministerial group on the disinvestment of Air India, said the process was moving “quite well” and the government would soon appoint a transaction advisor.

In a meeting held last week, the government also discussed whether Air India’s disinvestment could be completed this financial year.

But the privatisation of the airline faces serious stumbling blocks. With just IndiGo showing interest in buying the international business of the airline, government officials say that it cannot go in for an auction because that would require at least two to three competing players to discover the true value.

The problem has been accentuated by the fact that the policy does not allow foreign carriers to bid for Air India. Unless that changes, airlines such as Emirates or Singapore Airlines, which could have been interested, are out of the game.

This decision is owing to the fear of adverse political opposition the government might face from unions if the country’s crown jewel is sold to a foreign carrier. This is significant because the Lok Sabha elections are due in another 18 months or so.
25/09/17 Surajeet Das Gupta/Business Standard