Low-cost airline IndiGo’s decision not to bid for Air India is not a surprise to many as the Gurgaon-based airline had made it clear in an “unsolicited” bid even before the divestment process started that it was only interested in the Maharaja’s international operations and its low-cost arm Air India Express.
With the government making it clear in the Expression of Interest released last week that it wanted to divest Air India in totality (Air India, Air India Express and ground handling), IndiGo had no option but to withdraw from the divestment process. Perhaps, others too, who have been looking at parts of Air India for bidding, will now have to rethink.
In one sense, the government’s decision does clarify Air India’s divestment process as now only those who have the financial standing to bid for the airline in its entirety will remain. There is already talk that Jet Airways may tie up with Air France-KLM for making a bid for Air India.
Two other airlines — Singapore Airlines and the Dubai-based Emirates — seem to fit the bill as both have been consolidating their operations in the recent past.
Singapore connect
In the case of Singapore Airlines, since July last year, Scoot and Tigerair have started operating under the brand name ‘Scoot’ which is the low-cost, medium-to-long haul arm of the Singapore Airlines Group. This is managed by Budget Aviation Holdings (BAH), a wholly-owned subsidiary of Singapore Airlines Group (SIA).
During Prime Minister Narendra Modi’s visit to Singapore in November 2015, the two countries signed a memorandum of understanding which facilitates co-operation in a number of agreed upon areas of civil aviation services and airport management beginning with Jaipur and Ahmedabad airports.
Though this proposal is yet to get off the ground it is still something to keep in mind while looking at Air India’s divestment and who the interested international airlines may be.
With Emirates too, it is a similar situation. Late last year, Emirates and its low-cost arm flydubai decided to work together, thus, consolidating operations of the two airlines.
Though Emirates and flydubai are managed independently, they are leveraging each other’s networks to scale up their operations and accelerate growth. Emirates has also been keen to operate more flights to and from India but the Centre has not agreed to that proposal as yet.
The Indian government has also been making overtures to West Asia with Modi visiting the region which was followed by a stream of high profile visits from there to India.