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| Source - Airplane Pictures |
Air India Expression of Interest has been released by the government. The government hopes to announce EOI winner on May 28. Then, the government would proceed with RFP and RFQ. Aviation experts suggest that the complete sell-off will be done before December 2018.
The government has decided to retain a 24 percent stake in Air India and Air India Express, as part of its divestment in the state-owned airline. The government is also proposing divesting 50 percent of its stake in Air India Sats Airport Services. The divestment is to be carried out through an open competitive bidding process.
Air India is the national flag carrier of our country with a significant market position in the domestic and international aviation market. Air India along with Air India Express has 42.8% share of international traffic to and from India among Indian carriers and 16.9% share amongst international carriers. With the competition increasing from new players in India's domestic aviation market, Air India's domestic market share has been reduced to 12.3% recently.
Air India, being the oldest commercial airplane, has extensive reach at smaller airports. Air India, a prestigious star alliance member operates to/from 54 domestic locations and 39 international destinations. The world's longest direct flight, from Indira Gandhi International Airport in Delhi to San Francisco is operated by Air India. Air India has an operated fleet of 115 aircraft as on December 2017, comprising of Airbus and Boeing. The Air India Express, the low-cost carrier operates from 16 domestic and 13 international locations.
Air India SATS is a 50:50 joint venture between Air India Limited, and SATS Limited. As part of the Indian Government's initiative to upgrade its airports to world-class facilities and attract more airlines to fly into India, AISATS was formed with the vision to provide world-class airport services in ground and cargo handling that exceed customers’ expectations. Since the start of its operations in 2008, AISATS has provided hassle-free and comprehensive solutions to its customer airlines in international airports at Bengaluru, Delhi, Hyderabad, Mangalore, and Trivandrum. AISATS has more than 7000 employees.
The government is proposing a strategic divestment of the airline by transferring management control and sale of 76 percent of its equity share capital in Air India. Ernst and Young is the transaction advisor to the government on the divestment process.
The bidder should have a minimum net worth of 5,000 crore rupees and the requirement is subject to certain conditions depending on the class of entities. Among others, the Civil Aviation Ministry has said that each consortium member should have a positive profit after tax in at least three of the immediately preceding five financial years from the EoI deadline. The bidder will have to keep the name 'Air India' for a specified number of years mentioned in RFP proposal. The last date for submission of EoI is May 14 and intimation to the qualified interest bidders will be made on May 28. Bidding can be done as a single player or as part of a consortium.
CAPA, an aviation think-tank has said that Air India may get 6 to 8 bidders.
- Chaitanya Kulkarni
Source - Ministry of Civil Aviation.
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