Air India to be split into 4 companies

The stake sale in Air India could be done by splitting the flag carrier into four separate companies, Minister of State for Civil Aviation Jayant Sinha has said.

The disinvestment process of the debt-ridden airline is expected to be completed by 2018-end, Sinha said.

The core airline business comprising Air India and Air India Express will be offered as one company, while its regional arm of ground-handling and engineering operations will also be sold separately, Sinha was quoted by Bloomberg as saying.

"Aviation is a very fast-growing sector, with really exciting opportunities for all participants, so we felt that all of this will unlock growth and competitiveness of Air India group. We expect it to be a very bright future for its employees," he said. Sinha's comments come days after the Union Cabinet approved changes in the FDI policy to allow foreign carriers to own 49% stake in the flag carrier under the approval route. This would now allow foreign airlines to bid for the national carrier with an Indian partner, who will have majority stakes and control over management.

The Union Cabinet on June 28, 2018, gave an "in principle" go ahead for the strategic disinvestment of Air India, which has a debt of over Rs 52,000 crore and surviving on a bailout package rolled out by the previous UPA government, after tasking a Group of Ministers to work out its modalities. Earlier in 2000, the then A B Vajpayee government had cleared the disinvestment of Air India, but it could not go through, following protests.

Low-cost carrier IndiGo and the Tata Group had earlier evinced interest in bidding for the national carrier.

Meanwhile, demanding a rollback on the decision to disinvest Air India, senior CPI MP D Raja shot off a letter to Prime Minister Narendra Modi, saying that the hasty move to sell off the national carrier will do "irreversible damage" to the country.

Raja warned that the ticket prices will sky-rocket, if the government goes ahead with its plans, as the national carrier is acting as a "buffer" against a price cartel.

"It is only the presence of Air India that is acting as buffer against the informal price cartel already in place," he said.