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Despite more contenders pulling out -- Fresh bids for AI, IA unlikely now

P. Manoj

Ashwini Phadnis

NEW DELHI, Feb. 25

THE Government is likely to take the disinvestment process for Air India (AI) and Indian Airlines (IA) forward even if there is only one bid, as long as it exceeds the reserve price which is to be set for each of the two airlines.

``It is unlikely that the Government will think of rebidding immediately for the two airlines. Even if one of the airlines receives a single bid, which is higher than the reserve price, the disinvestment process will move ahead,'' senior officials of th e Department of Disinvestment (DoD) told Business Line.

Despite more and more contenders dropping out of the race for acquiring a stake in the two airlines, officials explained that the disinvestment process is ``very much'' on.

When queried whether the low turnout at the last minute would force the Government to go in for a rebid, officials said: ``We are yet to take a final decision on this, although it is highly unlikely.''

Officials were of the opinion that in the case of IA, the tepid response might have been due to the anticipated changes in the domestic aviation rules.

The Ministry of Commerce is said to be keen on hiking the Foreign Direct Investment (FDI) cap in several sectors, including aviation, and also allowing foreign airlines to enter the domestic sector.

However, the officials were clear that the current bidding process would be taken forward within the parameters laid down for the sector when the bidding process started.

``A final decision on the change in policy is yet to be taken. There are little indications as to by when and if at all there will be any changes. So we have to go by the existing policy,'' the officials said.

While the Government has all along maintained a stony silence on the identity and numbers of suitors for the two airlines, it is widely believed that there were at least six major suitors for AI, including the L.N. Mittal group (which had a technical col laboration with British Airways and Quantas), Emirates, Delta-Air France, the Tatas along with Singapore Airlines and the Hindujas.

Although there is no official confirmation since the expiry of the deadline for submitting initial technical bids and consortia details, it is widely believed that only the Tatas and Hindujas are left in the race for a stake in AI.

Agreeing with the thinking of DoD officials, industry sources felt that retendering for the two airlines will serve no purpose.

``Retendering will delay the whole process. Besides, what is the surety that the retendering will ensure that better or more players actually bid for the two airlines,'' industry sources told Business Line.

Officials added that since both AI and IA were in need of urgent financial and product upgrade infusion, which the known bidders will be able to provide, holding the disinvestment process in abeyance will serve no purpose.

``Let us not go by numbers but look at the identity of some of the known bidders. SIA is a leader and has a huge surplus of funds which can help AI regain its lost glory. Retendering will only delay the process and cut off a much needed life-line for tur ning around the Maharaja,'' chamber officials said.