Air India has been a loss making enterprise. Government of India had decided to disinvest its stake in Air India. The airline has now been included in the list of FDI. Foreign airlines can now own up to 49% stake in Air India. However government wants to ensure that management control and ownership remains with an Indian entity. Therefore government will carefully scan and vet credentials o all bidders. Post disinvestment foreign airlines cannot own more than 49% stake in Air India.
Sale of Air India will involve its core aviation assets packaged with low-cost subsidiary Air India Express and SATS which is a ground handling joint venture with Singapore Airport Terminal Services (SATS). Both Air India Express, a no frills overseas carrier and AI-SATS are profit-making subsidiaries of the airline. Air India Express is a fully owned subsidiary, Air India and SATS own 50% each of the ground-handling joint venture.
All non-core assets, like the Air India building in Mumbai and other offices, will not be part of the sale and become part of the Special Purpose Vehicle (SPV). Core aviation assets include aircraft, slots at airports and flying rights to various countries. The SPV will house Air India’s non-aircraft debt as well as non-core assets. Assets like Air India offices, residential quarters, land and ticketing offices will become part of the SPV. All non-core aviation assets will be transferred to the SPV. Air India operates to 44 foreign destinations and 72 domestic destinations and has assets in each of these cities
What FDI increase to 49 percent means for Air India
Foreign airlines allowed 49 percent in Air India
Article by Col P Chandra (Retd)
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