IndiGo does not want govt in any Air India deal

Wednesday 12th July 2017 06:31 EDT

Low-cost carrier IndiGo isn't keen on taking up the government as a partner in case it finds success in acquiring international operations of Air India and AI Express. The airline also announced that it would start low-cost long-haul overseas flight “with or without” the AI deal working out. “We would look at acquiring all of AI's international operations and AI Express,” IndiGo's reticent founder-promoter Rahul Bhatia said.

His partner Rakesh Gangwal said, “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.” The airlines had sent a formal expression of interest for international operations of AI and AI Express, last week, after the government had approved divesting its stake in AI. If acquisitions of only international operations are not possible, IndiGo had offered to acquire all operations of AI and AI Express.

Both the founder-promoters said India is a huge market for international travel but its hubs for globe-trotting are abroad. With more than 40 per cent domestic market share, IndiGo felt it should enter the long-haul market “irrespective of how the AI story plays out.” Gangwal said, “Our original plan was to share our thinking at the end of this month. However, that got pre-empted due to the government's in principle decision to divest itself of Air India. We believe international long-haul markets are ready for right type of low cost operations.”

Bhatia said carving out of an airline operations for sale is not a new concept. “A few decades ago, United Airlines acquired Panam's Pacific Operations. Based on the success of that transaction, United then followed up by acquiring Pan Am's London routes in 1990.”

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