After years of waiting, the outcome of the privatization of Air India could be concluded within hours. Indian publications are reporting that the announcement on the final decision could be made today. All money is on Tata Sons taking back control of the airline after more than 50 years.
Is today the day?
The Indian government is widely expected to make an announcement regarding the outcome of bidding for national carrier Air India today. The announcement will bring to a close years of attempts to privatize the state-owned carrier, which has failed to make a profit in more than a decade.
Front runner to be awarded the airline and its assets is the Tata Group. The powerful Indian conglomerate is one of only two bidders left in the running, alongside SpiceJet founder Ajay Singh. It has been rumored all week that Tata had won, but the official announcement is yet to be made.
According to reports in Indian media, a committee of ministers headed by Home Minister Amit Shah has been undertaking the final vetting of the bids. The outcome is expected to be presented later today, with the result already considered a foregone conclusion.
Securing the purchase of Air India will be something of a homecoming for the airline, which was originally founded by the father of the Tata Group, J R D Tata, more than eighty years ago. The airline was sold to the Indian government after the Second World War in 1946, so this will be a return to its roots 68 years in the making.
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A formidable aviation force
The winning bidder will secure Air India’s assets, which unfortunately includes its debts of around $8 billion. However, also in the sale are valuable landing slots at some of the world’s most congested, including more than 6,000 in India and some at Heathrow in London. Also in the deal is Air India Express and AISATS, the airline’s cargo and ground handling business.
Tatas have been clear that they intend to consolidate Air India and its assets with their own aviation businesses. Notably, this would mean a merger with Vistara, as well as AirAsia India and potentially Air India Express, all into one mega airline.
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A major Tata competitor is IndiGo, India’s largest airline. Its CEO Ronojoy Dutta has commented to Moneycontrol that he thinks the Tatas will be a formidable force, but that he welcomes the competition. He said,
“The Tatas will be a formidable force. No question. I am glad AI is being divested. Having an airline that is not run on economics is not good for the industry … The Tatas will be economically responsible; that is good for the entire industry. I welcome what is happening.”
Whether the announcement comes today or in a weeks’ time, there’s no question that this long-awaited conclusion will be welcomed by many in India. Finally, Air India could be given a chance to become profitable again.