Friday, December 18, 2020

Air India sale to take wing?

Unlike in 2018, when the Centre’s attempt to find a buyer for the beleaguered Air India saw no takers, there are several bidders in the fray this time around. By the time the deadline to submit expressions of interest (EoIs) to bid for the national carrier closed on December 14, “multiple EoIs [had been] received,” said Tuhin Kanta Pandey, secretary of the department of investment and public asset management. According to reports, the bids include one from Tata Sons, which already holds 51 per cent stakes in Vistara and AirAsia India, as well as SpiceJet and a consortium consisting of some Air India board members, staff and a US-based investment firm, Interups Inc. Physical bids need to be submitted by December 29, and qualified bidders are likely to be notified on January 5.

The bid to sell Air India comes at a time when its domestic market share has nosedived to single digits. As of August, Air India had a 9.1 per cent share, as per DGCA (Directorate General of Civil Aviation) data. IndiGo has the largest share, 60.4 per cent, followed by SpiceJet with 15.7 per cent, while Vistara and AirAsia India had 4.2 per cent and 6.2 per cent, respectively. However, in international operations, Air India claims to be the leader, with an 18.6 per cent market share.

Damaged by decades of mismanagement and bad commercial decisions, the erstwhile Maharaja had sunk into a financial quagmire, defaulting on loans and sometimes delaying salaries. “To keep Air India running, we have invested Rs 50,000 crore [in it]. That money is the government’s money, it’s your money. It could have been used for school education,” said then-Union finance minister Arun Jaitley in an interview in 2015. “And if 86 per cent of [the air travel market] can be handled by the private sector, it can also handle 100 per cent.” That was one of the first serious signals sent out by the NDA government that it intended to sell the national carrier, and a precursor to an announcement to that effect in June 2017. If the current attempt to sell

Air India, which posted losses of Rs 8,556.4 crore in 2018-19, is successful, it will also take some weight off the Centre’s shoulders. First, it will signal the government’s commitment to divesting state-owned firms, it has been widely criticised for delays in this effort. It will also be a step towards the ambitious disinvestment target of Rs 2.1 lakh crore for financial year 2020-21, of which the government, so far, has only 5 per cent in the bag.

If the bid by Tata Sons is successful, the sale will also be significant for historical reasons, Air India was founded by J.R.D. Tata, Tata Group chairman from 1938 to 1988, who launched India’s first commercial airline, Tata Airlines, in 1933. In July 1946, Tata Airlines became a public limited company under the name Air India, but was nationalised in June 1953.

18/12/20 MG Arun/India Today

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