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Jayant Sinha, Minister of State for Civil Aviation, said on Friday that a private bidder will be allowed to pick up 51 per cent or more stake in Air India.
Privatisation process
“We are privatising Air India. The term has been used in the Budget which means more than 51 per cent stake of Air India is going to be transferred into the private sector. The fact of the matter is we will be transferring control to the private sector, therefore, the government stake will be 49 per cent or less,” the Minister said.
The Alternate Mechanism of Ministers will have to take a call whether there should be a 100 per cent stake sale of Air India.
On the issue of whether a foreign investor holding a 51 per cent stake in Air India would mean that that the Maharaja would cease to be an Indian carrier, the Minister said: “I do not know the exact IATA definition of a national carrier. I will not speak on this issue. But Air India will be transferred to the private sector. Just as British Airways, American Airlines, Lufthansa and Qantas are in the private sector, Air India will also be in private sector.”
The Minister added the government is looking at putting up four different entities – the airline, Air India Express and Sats (which will be one equity) the engineering company, the ground-handling company and Alliance.
“A bidder will be allowed to bid for any one or all four,” he said.
Apart from IndiGo, a foreign airline has sent a confidential letter showing interest in Air India. The Minister declined to give details of the region or where this airline was from. The successful bidder will be announced by the end of June and the entire legal process of privatisation of Air India would be completed by December this year.
The Cabinet Committee on Economic Affairs had given its approval for the strategic disinvestment of Air India and five of its subsidiaries, based on the recommendations of Core Group of Secretaries on Disinvestment, on June 28.
The Cabinet also approved the constitution of an Air India-specific Alternative Mechanism headed by the Minister of Finance, including the Minister for Civil Aviation and such other Minister(s) to guide the process of the airline’s strategic disinvestment from time to time and decide on the treatment of its unsustainable debt, hiving off certain assets to a shell company, the quantum of disinvestment and the universe of bidders.
Giving a fillip to the divestment process, the Finance Ministry notified the Union Cabinet’s decision taken on January this year to allow a foreign airline to pick up a stake of up to 49 per cent in Air India.
The Centre for Asia Pacific Aviation recently said in Mumbai that up to four Indian carriers – Jet Airways, IndiGo, SpiceJet and Vistara – could express an interest in buying a stake in Air India. IndiGo has already written to the government showing its interest in picking up a stake in the airline.
Delhi-based Bird Group, which owns IndiGo, has written to the government saying that it is interested in the ground-handling activity which Air India carries out.
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