Air India gets a new address: the chronology of the privatization of Air India.
After more than two decades and three attempts, the government has finally sold its flagship national carrier Air India, and it is deja vu for the Maharaja as it returns to the home of its founding father, the Tata Group.
Jehangir Ratanji Dadabhai (JRD) Tata founded the airline in 1932 and named it Tata Airlines. In 1946, the aviation division of Tata Sons was listed as Air India, and in 1948, Air India International was launched with flights to Europe.
International Service was one of the first public-private partnerships in India, with the government holding 49 percent, the Tatas 25 percent and the public holding the remainder.
In 1953, Air India was nationalized and for the next four decades it remained the prized possession for India, controlling the majority of domestic airspace.
With the opening of the aviation sector to private companies in 1994–95 and private entities offering cheap tickets, Air India gradually began to lose market share.
As part of pursuing its wider privatization and disinvestment, the Atal Bihari Vajpayee-led NDA government in 2000–01 tried to sell a minority stake or 40 percent stake in Air India.
Singapore Airlines showed interest in buying a stake along with the Tata Group, but eventually Singapore Airlines withdrew mainly due to opposition to privatization by trade unions. Hence, derailing the disinvestment plan.
No privatization agenda, including Air India, was pushed forward in the 10 years following the Congress-led UPA governments from 2004-14. The Turnaround Plan (TAP) and Financial Restructuring Plan (FRP) for Air India were approved by the previous UPA government in 2012. Air India has suffered every year since its merger with Indian Airlines in 2007-08.
Cut in 2017: The Narendra Modi-led NDA government was putting its weight behind the privatization of CPSEs ever since it came to power in 2014.
Here is the chronology of ‘Air India’ privatization plan:
June 2017: The Cabinet Committee on Economic Affairs (CCEA) has given in-principle approval to consider strategic disinvestment of Air India and its five subsidiaries. A panel of ministers or Air India Specific Alternate Mechanism (AISAM) was constituted for this purpose.
March 2018: Government invites EOI from investors to buy 76 per cent stake in Air India, remaining 26 per cent will be with the government. The deal will also include 100 per cent in Air India Express and 50 per cent in ground handling arm AISATS. The last date for bidding was May 14.
The buyer was required to take on its books Rs 33,392 crore or about 70 per cent of the distressed carrier’s debt.
May 2018: No bids were received for Air India.
June 2018: The government has decided to slow down the sale of Air India till the oil prices ease.
January 2020: Government issues EOI for privatization of Air India. The government is selling 100 per cent to get out of Air India completely. The deal will also include 100 per cent in Air India Express and 50 per cent in ground handling arm AISATS. The last date for bidding has been extended 5 times till December 14. According to the EoI, of the airline’s total debt of Rs 60,074 crore as on March 31, 2019, the buyer would need to absorb Rs 23,286.5 crore.
October 2020: Government sweet deal; Gives investors the flexibility to decide the amount of Air India debt they want to absorb.
December 2020: The DIPAM secretary said Air India’s EOI received “multiple bids”.
March 2021: The then Civil Aviation Minister Hardeep Singh Puri said: “… there is no option, we either privatize or we wind up the airline.
Despite Air India making money now, we lose Rs 20 crore every day.
April 2021: The government started inviting financial bids for Air India. 15 September Last date for bidding.
September 2021: The Income Tax Department allows the new owners of Air India to carry forward the loss and close it against future profits.
September 2021: Ajay Singh, promoter of the Tata group, SpiceJet, made the financial bid.
October 2021: The government announced that the Tata group makes a winning bid of Rs 18,000 crore for Air India.
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