Jet Airways became the latest major Indian airline to pull out a bid for debt-laden national carrier Air India in a new blow to the government's privatisation plans. The announcement came just days after rival IndiGo pulled out of the race to acquire Air India's operations meaning the government now has no clear front-runner in the sale campaign.
"We welcome the government move to privatise Air India. It is a bold step," Jet Airways' deputy chief executive, Amit Agarwal said in a statement. "However, considering the terms of offer in the information memorandum and based on our review, we are not participating in the process," he added. Once the country's monopoly airline, Air India has slowly lost market share to new low-cost private players in one of the world's fastest-growing airline markets.
Air India ran losses for nearly a decade after a botched merger in 2007 and has debts of around $7.67 billion according to government figures.
IndiGo pulls out
Earlier, low-cost carrier IndiGo has withdrawn from bid under the current terms of sale. IndiGo president Aditya Ghosh said, “From day one, IndiGo has expressed its interest primarily in the acquisition of AI's international operations and AI Express. However, that option is not available under the government's current plans for AI. Also, as we have communicated before, we do not believe that we have the capability to take on the task of acquiring and successfully turning around all of AI's airline operations.”
When the government had decided to divest in AI in last June, IndiGo was the first to show interest in the international flights of AI and AI Express. Aviation Ministry brass said they won't be able to comment on this development or on whether the terms of AI sale may be changed as the divestment “process is on”. Until now, IndiGo, Tata-Singapore Airlines joint venture Vistara, and an unnamed foreign player have expressed interest in AI, while others like Jet and Qatar Airways were learnt to be evaluating the situation. IndiGo's latest move will not affect its plans to start international medium-and-long flights as the promoters had made it clear last year that they will do so “with or without” AI. Although, they admitted that expanding wings in distant markets without AI will take much longer.
The government's terms of sale offer to divest its 76 per cent stake in AI. IndiGo co-promoter Rakesh Gangwal had said last year, “A joint venture or joint ownership with the government is at best a very, very difficult proposition... Government has owned and managed AI for more than 50 years. They are looking to divest in it... From our perspective as a corporate entity, we would not go down a path where there would be a JV or even a minority, majority stake which the government would own. Maybe (it's) a good model, but we cannot bring value to that proposition.”
