Air India divestment: The curious case of the missing suitor could force Centre to dilute bidding criterion for national carrier

Ailing Air India and its group entities are up for grabs. However, almost every suitor named by Indian media so far has, either pulled out of the race to acquire the national carrier, or has been quick to issue a denial, raising questions about who would be a worthy suitor for the Maharaja? The latest denial came on Tuesday, from Naresh Goyal's Jet Airways.

Jet became the latest major Indian airline to rule out a bid for the debt-ridden national airline, dealing a new blow to the government's ambitious privatisation plan.

"We welcome the government move to privatise Air India. It is a bold step. However, considering the terms of offer in the information memorandum and based on our review, we are not participating in the process, " Jet Airways' deputy chief executive, Amit Agarwal told the AFP.

SAC denies it bid for AI

 Air India divestment: The curious case of the missing suitor could force Centre to dilute bidding criterion for national carrier

Representational image. Reuters

On Monday, Swiss Aviation Consulting (SAC) said it never expressed an interest in acquiring Air India or parts of it. Nor did it act as a front for some other stakeholder. The denial followed a report that said the Swiss firm was interested in putting down a bid for Air India.

SAC told Reuters that it had not been in contact with Indian government officials or Air India representatives regarding a bid for the carrier.

Jet and SAC are among several airlines named as potential suitors.

IndiGo opts out

Last Friday, budget carrier IndiGo, which had initially evinced an interest in acquiring Air India's international operations, was compelled to opt out as such an option was not available under New Delhi's disinvestment plan for Air India.

But the government wishes for IndiGo to return to the negotiation table. Civil Aviation Secretary R N Chaubey said the government intended to expedite the divestment process, but made it clear that Air India's operations would not be split in the bidding process.

"From day one, IndiGo has expressed its interest primarily in the acquisition of Air India's international operation and Air India Express. However, that option is not available under the government's current disinvestment plan for Air India. Also, as we have communicated before, we do not believe we have the capability to take on the task of acquiring and successfully turning around all of Air India's airline operations," President and Whole Time Director Aditya Ghosh said in a statement on 5 April.

So is the Air India disinvestment plan, put forth by the government, unattractive for bidders? Will the government dilute bidding criterion to attract a buyer?

“We have the procedure in place. If there are multiple bidders, we go ahead with it. If there’s only one bidder, the civil aviation ministry will take a call on that. If there are no buyers, we will have to see what we can do,” a government official involved in the sale process told Quartz on Monday

Earlier, on 28 March, the Ministry of Civil Aviation pushed out a so-called preliminary information memorandum on Air India's strategic disinvestment, which laid down the ground rules for a deal.

However, media speculation kicked-in well ahead of the publication of the memorandum.

Qatar Airways, Air France & Delta 

On 21 March, Qatar Airways had to deny reports that it was in talks to bid for Air India. "Qatar Airways firmly denies it is involved in any talks regarding the acquisition of Air India," it said in a statement, after reports stated the airline could float a consortium to bid for Air India.

On 11 March, a Jet Airways spokesperson said the airline would not like to comment on speculation that the Mumbai-based carrier could partner Air France-KLM and Delta Air Lines to table a bid for Air India.

Interestingly, Jet Airways CEO Vinay Dube had a decade-long career at Delta Air Lines prior to joining the Indian carrier in 2017. He served as Senior Vice President (Asia-Pacific) at the American airline.

An early bird

Last year, aviation services provider Bird Group reportedly expressed an interest in acquiring Air India's ground handling subsidiary, Air India Air Transport Services Limited (AIATSL).

Ground rules 

According to the government's memorandum, the Narendra Modi regime will offload 76 percent of the national carrier, surviving on taxpayer monies at present, and transfer management control. The government will sell Air India, its low-cost arm Air India Express and Air India SATS Airport Services Pvt Ltd, an equal joint venture with Singapore-based SATS Ltd.

New Delhi has also appointed Ernst & Young LLP India as the transaction adviser for the strategic disinvestment process.

With inputs from agencies 

Updated Date: Apr 10, 2018 19:08:18 IST