Thursday, January 11, 2018

CAPA India welcomes decision to permit foreign airline investment of up to 49% in Air India

CAPA India welcomed the Indian Government's decision to permit foreign airlines to invest up to 49% in Air India in the upcoming divestment process. CAPA India noted this is in line with recommendations issued by CAPA three months ago on the key success factors for the privatisation of Air India and brings to an end the uncertainty on the issue. The decision should result in four to six serious bidders for Air India, including significant interest from foreign carriers, subject to the eventual terms and conditions of the offer. CAPA India stated the government's plan to allow foreign carriers to participate in the privatisation of Air India is not only a momentous reform for the aviation sector, but represents a very significant national economic policy decision, which will send a positive signal to global investors. There is no doubt this will be a complex transaction. Effective execution, within timelines, will be critical, and the process will need to be ring-fenced from potential disruption, including political opposition. Given the very positive long term outlook for the Indian economy and its aviation sector, a successful privatisation should enable the expansion of Air India, with corresponding jobs growth. Any near term risks to the workforce are likely to be addressed by the government. For these reasons, the divestment process should be supported by the employee and unions.
11/01/18 CAPA