Jet Airways and SpiceJet, the two leading private airlines of India, are likely to join the race to bid for debt-ridden Air India, along with Tata Group and IndiGo.
A top government source: "The economics of the game will change completely for whichever airline gets Air India. With its 14% domestic and 17-18% international market share, getting AI will be a paradigm shift for the successful bidder. Other airlines like Jet and possibly even SpiceJet will have no option but to bid for AI".
However, a SpiceJet official said that the airline is "too small" to bid for AI. Decision will be taken on the bidding once the terms are known, the official added. A top Jet honcho acknowledged to the newspaper that the thinking is on.
Jet Airways on Wednesday announced a major partnership with Air France, KLM and Delta and could get their backing to take over Air India. Abu Dhabi-based Etihad is also a 24 percent stakeholder in Jet.
IndiGo and Tata Group's interest
In July, IndiGo had openly expressed interest in buying the ailing national carrier's international routes and the Air India Express arm.
In a conference call, IndiGo's management had said that they do not have a desire to take all of Air India's debt and that acquiring all of Air India's subsidiaries is an "impossible task".
Earlier in June, Tata Group chairman N Chandrasekaran had informal talks with the government. Media reports also suggested that the Tatas could get Singapore Airlines on board for a minority stake. Tata Group currently operates two airlines in the country, AirAsia India (a joint venture with Malaysia's Air Asia) and Vistara (joint venture with Singapore Airlines).
The divestment process
The Union Cabinet on June 28 had given an in-principle approval for disinvestment of debt-laden state-run carrier Air India.
Stretched thin by competition from leaner and budget airlines, Air India is reeling under a debt of over Rs 52,000 crore, with about Rs 28,000 crore in working capital debt and about Rs 4,000 crore in interest burden alone. The national carrier has not turned profit in 10 years.
On August 8, the parliamentary panel set up to the divestment process heard views of various stakeholders on the disinvestment of national carrier Air India and Pawan Hans Ltd. The government is yet to announce the final terms for sale of AI.
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