The government has not yet announced formally the sale of its white elephant Air India to Tata Sons which together with Ajay Singh the promoter of Spicejet remains the two serious bidders and contenders. The national carrier is steeped in a massive debt of the order of Rs 70,000 crore and piling up a daily operational loss of Rs 20 crore.
Reports say Tata Sons is willing to takeover 15 percent of the debts along with the airline assets.
While its monumental debts were a put-off for the bidders in the earlier futile attempts at discovering an eligible suitor, Air India’s assets and rights—more than 4,400 domestic and 1,800 international landing and parking slots at domestic airports, and 900 slots overseas and a fleet of 172 aircrafts with 87 of them being owned—are the main attractions for a strategic buyer. The winning bidder will not only hold 100 per cent stake in Air India and its low-cost arm- Air India Express, but also a 50 per cent stake in ground handling company Air India SATS Airport Services Private Limited (AISATS).
Air India’s real estate, which once was touted to be possible attractions for suitors, have been ringfenced and are being sold separately.
Tatas already have presence in the domestic skies with their Vistara and AirAsia airlines. Hopefully it would make Air India (rechristened back to Tata Airlines?) its international arm, where it has plenty of scope especially from Indian travelers who perforce have to take a detour for their European and US destinations via Dubai (Emirates) or Doha (Qatar Airways) or Abu Dhabi (Ethihad).
The Middle East and Gulf nations have an inherent advantage—cheap aviation fuel which makes them ideal refueling stations in addition to making their airlines price competitive. Tatas may have to surmount many difficulties, including prevailing upon the government to rationalize the fuel tax, and slug it out with its competitors through innovative business practices. The domestic market is amenable to…