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Air India: Another effort to sell out

By IndianMandarins- 02 Nov 2019


In an attempt to sell national carrier, the government of India has decided to ease norms of sale for Air India however it is still finding it difficult on almost half a dozen issues crucial for the airline's successful disinvestment.

A core group of secretaries pondered over pending issues and resolve them so that the bidding process for Air India could be started by November end. This will be the second effort by the Modi government to disinvest Air India. The government had failed to attract even a single buyer forcing it to abandon the sale process last year.

Holding Expression of Interest (EoI) has been one among them, first stage of bidding, is whether FDI norms have to be relaxed to allow foreign companies to take full control of the airline and extending national carrier status after change in ownership.

While raising FDI limit in domestic airlines beyond 49 per cent for foreign carriers would enthuse carriers like Qatar Airways and Singapore Airlines to participate in the bidding, national carrier status would give right of first refusal to the new owner in seat allocation on international routes.

Transfer of additional debt to the special purpose vehicle (SPV) and future use of brand name Air India are other issues. Around Rs 10,000 crore of additional debt, over and above Rs 29,464 crore decided earlier, is proposed to be moved to Air India Assets Holdings Ltd (AIAHL), the special purpose vehicle of Air India for transferring part of its debt and assets.

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