Air India disinvestment: Any unsolicited interest not relevant now, says Civil Aviation Minister

With many airlines reportedly queuing up to pick up a stake in Air India, the civil aviation minister Gajapathi Raju said that any unsolicited expression of interest in the state-run carrier is not relevant at this stage. Gajapathi Raju made the statement in the Rajya Sabha while in response to a question. “The draft EOI document inviting proposals for disinvestment of airline is yet to be issued. Formal proposals from prospective bidders would be received thereafter only. Any unsolicited EOI at this stage is not relevant,” Raju said.

Earlier last week, Civil Aviation Secretary R N Choubey said that a foreign player has expressed interest in acquiring 49% stake in India. R N Choubey had said that the foreign player has shown an “unsolicited expression of interest for AI’s airline arm.”

Interestingly, while the identity of the foreign player and whether it is an airline is not yet established, a few foreign players are reportedly looking at AI’s disinvestment process with interest. Singapore Airlines and Vistara too are reportedly in talks with the government to pick up an equity stake in the national carrier. “In my opinion, the ideal buyer for Air India is a combo of Singapore Airlines and Indigo. An entity like Singapore Airlines coupled with people like Rakesh Gangwal who used to run United Airlines, used to run Air France and now is the promoter of IndiGo, should be brought together and the magic will happen,” Mohnish Pabrai, a leading US-based investor told ET Now in a recent interview.

Interestingly, while the Union Cabinet allowed 100% foreign direct investment into Indian airline operators under the automatic route, it has different rules for state-run Air India and allowed foreign airlines to invest up to 49% under the approval route, subject to the conditions that: (i) Foreign investment(s) in Air India, including that of foreign Airline(s), shall not exceed 49 per cent either directly or indirectly ensuring that substantial ownership and effective control of Air India shall continue to be vested in Indian National.

After the Union Cabinet approved investment of up to 49% in Air India, Minister of State for Civil Aviation Jayant Sinha says that the government wants Air India to remain an Indian carrier. “We want Air India to be an Indian carrier. When you look at what the foreign ownership caps are around the world, they are 49% or below 49%. The typical air services agreement that is signed for bilateral rights also in intended to ensure that substantial ownership and effective control stays with nationals of the country,” Jayant Sinha told CNBC TV18 in a recent interview.