By Prarthana Mitra
A Jet Airways-led consortium may soon bid to acquire a stake in national carrier Air India, according to reports. Jet Airways, Air France-KLM and Delta Airline have reportedly submitted an “expression of interest” in the ongoing Air India disinvestment process. Following the Union cabinet’s decision in June 2017 to hand over the management of the government-owned airline to the private sector, several stakeholders have expressed interest in acquiring the debt-ridden airline, which is divesting 60% of its stakes. However, spokespersons for the airlines have not yet confirmed news of the alleged ‘expression of interest’ or plans to bid for a stake.
The latest developments come after low-cost carrier IndiGo expressed interest to buy Air India’s international operations last year.
The government is likely to invite initial bids to purchase a stake in the debt-ridden Air India in the coming weeks, Civil Aviation Secretary Rajiv Choubey had said last week. The Indian carrier currently has debts amounting to Rs. 52,000 crore, including an Rs. 22,0000-crore aircraft acquisition loan.
Partnering for better connectivity
The news of the airlines forming a consortium does not come as a surprise, given the announcement of a partnership between Jet Airways and Air France-KLM in November last year. The move boosted connectivity between 106 European cities and 44 domestic destinations. Air France-KLM and its partners Delta and Alitalia operate the largest Trans-Atlantic joint venture with over 270 daily flights.
It is also interesting to note that Jet Airways chief executive officer Vinay Dube served as senior vice president (Asia-Pacific) of Delta Air Lines before joining Jet Airways last year.
Plans for privatisation
Although Air India is currently in debt, acquiring the airline can help the buyers enhance their footprint and bilateral aviation rights. The buyer will get access to Air India’s s aircraft parking facilities in domestic and international airports, as well as access to the maintenance and repair operations set up by the airline; Air India has the biggest such facility in the country.
Indian Minister of State for Civil Aviation Jayant Sinha said that the government will transfer a part of the carrier’s $8.5 billion debt to a special purpose vehicle before selling a stake in the airline. The airline has six subsidiaries, including its low-cost arm Air India Express and subsidiary AISATS.
According to reports, the government plans to split the airline into four entities—the core airline business (Air India and Air India Express), the regional arm (Alliance Air), ground handling and engineering operations— with at least a 51% stake on offer for each.