Indian government has taken a step forward in Air India’s privatization saga. It began evaluating financial bids received from Tata Group and the founder of SpiceJet, two parties that showed their interest in the flag carrier’s privatization.
On September 29, 2021, the Indian government entered the next phase of the Air India privatization process, during which it will evaluate the financial bids for the loss-making carrier against the undisclosed reserve price and accept the bid which exceeds the benchmark the most. The two bids are submitted by Tata Group, the holding company of the $113 billion “salt-to-software” conglomerate, and Ajay Singh, the CEO of Indian low-cost airline SpiceJet.
The ailing Air India has been on sale since 2017. The first attempt to sell the ailing flag carrier failed because the bidders disagreed on the governmental requirement to take over the entire Air India debt, which exceeded $10 billion (Rs 50,000 crore) at the time.
Then, the government improved its offer by allowing potential purchasers to determine what part of the debt they were willing to acquire as part of the Air India capital transaction deal and in January 2020 repeatedly initiated the sale of the airline’s equity. This time the potential bidders were offered to purchase 100% of Air India shares with an initial deadline for submitting bids in March 2020.
However, due to the ongoing COVID-19 pandemic, the deadline was extended several times, and bidding only came to a close in December 2020.
Potential bidders were offered full control of the 4,400 domestic and 1,800 international landing and parking slots at domestic airports currently served by the airline, plus 900 slots at foreign airports. The government also sweetened the deal by proposing full control of Air India’s subsidiary, Air India Express, alongside 50% of the Air India cargo and ground-handling services.
Multiple entities submitted preliminary proposals for the debt-ailing airline, but the government officially shortened the list and named Tata Group and Ajay Singh as the final bidders.
Due to the pandemic-related issues, the government expects to close the deal during the ongoing financial year.