Air India divestment to start in next fiscal

The Government of India is expected to float the process for Expression of Interest (EOI) for the national carrier Air India by the end of February, 2018. The whole process will pushing the divestment into the next fiscal.

An in-principle approval for considering the strategic disinvestment of Air India and five of its subsidiaries was given by the Cabinet in June. Following which is a panel, Air India Specific Alternative Mechanism (AISAM) or Group of Ministers (GoM) was formed to chalk-out the modalities for the divestment process. A due diligence process for the five subsidiaries and the parent company by the transaction advisor E&Y is currently underway.

A decision on whether Air India will continue with its brand name, the Maharaja logo, etc. when it ceases to be the national carrier also needs to taken by the GoM.

IndiGo was the first company that expressed interest in acquiring the assets of Air India, albeit an unsolicited one. The Minister of State for Civil Aviation Jayant Sinha has said that several airlines including Tatas have approached the ministry informally.

Earlier a debate was sparked-off when IndiGo clarified that it is only interested in the international operations of Air India, which indirectly means getting the Star Alliance tag and prime slot in major international airports.

Air India has a debt of nearly Rs. 52,000 crore and is staying afloat on government funds. The airline has managed to increase its operating profit to Rs. 215 crore in the last financial year. In 2016-17, the airline registered a net loss of Rs. 3,643 crore, while operating profit stood at Rs. 215 crore, as per provisional figures.

As far as the Indian aviation sector is concerned, domestic air passenger traffic has grown at 17.27 per cent during the January-November 2017 period. The rise in traffic has helped airlines to post good quarterly figures and place orders for new aircraft foreseeing a growth in demand.