A Bloomberg report claimed that a panel of ministers accepted a proposal from officials recommending salt-to-software conglomerate Tata Sons ahead of an offer from Ajay Singh, promoter of India’s airline operator Spicejet Ltd.
“Media reports indicating approval of financial bids by Government of India in the AI disinvestment case are incorrect,” the ministry said in a tweet. “Media will be informed of the Government decision as and when it is taken.”
Air India and Tata Sons declined to comment.
The finance ministry said it had received bids for the airline, but did not name the bidders. The winning bidder would win control of Air India’s 4,400 domestic and 1,800 international landing and parking slots at domestic airports, as well as 900 slots at airports overseas, including London’s Heathrow Airport.
It would also get 100% of the low-cost arm Air India Express and 50% of AISATS, which provides cargo and ground handling services at major Indian airports.
Media reports indicating approval of financial bids by Government of India in the AI disinvestment case are incorre… https://t.co/CrqDO3dW1D
— Secretary, DIPAM (@SecyDIPAM) 1633074226000
The selloff will be a key victory for Prime Minister Narendra Modi, who has embarked on a bold privatization plan to plug a widening budget deficit. It will also put an end to a decades-long struggle to offload the money-losing flag carrier. Multiple governments have tried to sell the airline — which began life as Tata Airlines in 1932 — but those attempts were either met with political opposition or a lack of interest from potential buyers.
For Tata Sons, the holding company for the salt-to-software empire and owner of British luxury carmaker Jaguar Land Rover, a win means it’s coming back to an asset it started almost 90 years ago.
Established by legendary industrialist and philanthropist J.R.D. Tata, who was India’s first licensed pilot, the airline originally flew mail in the 1930s between Karachi in then-undivided, British-ruled India and Bombay, now known as Mumbai.
Once it turned commercial and went public in the 1940s, Air India quickly became popular with those who could afford to take to the skies. Its advertisements featured Bollywood actresses and passengers were treated to champagne and porcelain ashtrays designed by surrealist painter Salvador Dali.
However, with the advent of private carriers in the 1990s, and then a rush of low-cost, no-frills airlines in the mid-2000s, Air India lost its edge in both domestic and international markets. The carrier, known for its Maharaja mascot, suddenly wasn’t the only option for flying overseas and its reputation for impeccable service and hospitality began to ebb.
Gulf carriers, including Emirates Airline and Etihad Airways PJSC, also began to offer seamless, and cheaper, connections to Europe and the U.S. via their hubs in Dubai and Abu Dhabi, hurting Air India even further.
After Air India merged with state-owned domestic operator Indian Airlines Ltd. in 2007, losses started to mount and by 2013, the country’s then-Civil Aviation Minister said privatization was key to its survival. In 2017, the government approved that route and a committee was set up to start the process.
This most-recent sale attempt hasn’t been easy either. IndiGo, the only airline to have publicly shown interest in buying parts of the carrier, dropped out of the reckoning in 2018, saying it didn’t have the wherewithal to acquire Air India in its entirety and make it profitable.
Air India — which hasn’t turned a profit since its 2007 merger with Indian Airlines and is saddled with a debt of around 600 billion rupees ($8.1 billion) — does have some attractive assets, including prized landing and parking slots at London’s Heathrow airport, which may help Vistara lure business travelers with direct flights to Europe.