Poor response to AI, IA sell-off drive

Poor response to AI, IA sell-off drive
DEV CHATTERJEE

FEB 26: After the initial euphoria, the Union Government has no other alternative but to invite financial bids from the two bidders for both Air-India and Indian Airlines with Singapore Airlines being the only foreign airline to join the race along with the Tatas. With some of the world's big names deciding to keep away from the disinvestment, the government has the Tatas and the Hindujas to chose for Air-India, and the Hindujas again and Videocon to choose from for the domestic carrier, Indian Airlines.

The poor response to the privatisation drive for both money-losing airliners has led to clamoring for re-bidding which the government has declined flatly. ``There is no proposal as of now on rebidding... we are proceeding with the process of bidding," Disinvestment Minister Arun Shourie said in New Delhi. The technical bids for the two carriers would be put before the Cabinet after an assessment from the financial advisors.

One of the bidders, Videocon International told this newspaper on Monday that the government should avoid any re-bidding considering its high commitment towards disinvestment and reducing fiscal deficit. ``We have invested a lot of time and energy in our bid for Indian Airlines. All over the world, the last stage of privatisation race is between two players only. I do not think they have received poor response to the privatisation of airlines,'' Chairman of consumer durable giant, Videocon, Venugopal Dhoot said.

Most of the initial bidders for Air-India including L N Mittal-Kotak Mahindra-British Airways, Emirates and Delta-Air France have pulled out of the race for Air-India due to lack of partners, unattractive terms and falling health of both airline.

Air France-Delta Air opted out of Air India race as it could not convince any Indian partner to join into the race. The consortium, however, has evinced its interest to remain in the race.

Similarly, after submitting their initial expression of interest (EoI) for both AI and IA, the Tatas have decided to focus only Air-India considering the present nebulous domestic aviation policy. As per GoI norms, foreign airlines are permitted to hold a maximum 26 per cent stake in Air India while the rest of the 14 per cent stake must be purchased by an Indian company. In Indian Airlines, the government is selling only 26 per cent to a strategic partner. In order to make the disinvestment unattractive, the government had retained the right to veto all the proposals to be made by the new management team irrespective of its holding.

As per the government disinvestment plan, it would short-list bidders for the final financial bid which would be invited before April this year. Analysts say the bidding from the NRI brothers, the Hindujas will create yet another controversy as the Hindujas are facing corruption charges in the Indian courts. ``We have to wait and watch whether the government gives the security clearance to let the Hindujas make a bid for the airline as they are facing prosecution in the Bofors corruption case,'' said an aviation analyst.

``However... looking at the poor response generated by the privatisation drive, the government as no choice to clear their (Hindujas) bid or hand over Air-India to Tatas and Indian Airlines to Videocon in a platter,'' he said.

Interestingly, the Hindujas had said that they are bidding in association with Luftahansa but the latter had flatly denied that it has anything to do with the Hindujas bid. In a statement, German-carrier Luftahansa said that it is not participating in the bid along with the Hindujas as one of its star member Singapore Airlines is already bidding for the airline with the Tatas.