Catastrophe has struck Air India yet again. After all the fanfare and brouhaha around the sale of the national carrier, the civil aviation ministry couldn't find a single bidder for the airline. Blame it on the daunting terms and conditions of the sale brochure or the lack of marketing by the government and its transaction advisor EY, the Air India sale process turned out to be disastrous.
Till about an hour before the closing of the bidding window on Thursday evening, people within and outside the government were hoping that a white knight would emerge to revive the fortunes of the flagging national carrier. Their hopes were dashed when the ministry of civil aviation put out a tweet: "As informed by the transaction adviser, no response has been received for the Expression of Interest floated for the strategic disinvestment of Air India. Further course of action will be decided appropriately."
Why did it happen and what's going to happen next are the questions that beg for answers at this moment. The run-up to the sale process was quite elaborate. The sale document was prepared after months of consultations with stakeholders. An inter-ministerial group was formed to look into the modalities of the sale and subsequently, regulations were tweaked to allow foreign carriers to own 49 per cent in the airline. It seemed that nothing could have stopped the government to end its nearly 70 years of ownership in the airline.
But what came out as EoI (expression of interest) - that offered to sell 76 per cent stake - seemed like something that wasn't well thought-through. Within days, domestic carriers started backing out citing their reservations against the sale conditions. The international road-shows that targeted airlines like Lufthansa, Air France-KLM didn't help much either.
Several reports quoting key officials in MoCA appeared later saying that the response to the sale process is decent. It was kind of puzzling because the ground realities were entirely different. But then one would not criticize the seller for exaggerating things, especially when it has to dispose of a loss-making airline, transfer Rs 33,352 crore of debt and liabilities, and put restrictions on the hiring-and-firing of a workforce that's already over-staffed.
The next few weeks are going to be crucial for Air India. If it were to operate on its own, the airline has a lot of battles to fight. It has lost track some years ago and is now dependent on taxpayers' money to stay afloat. The easy availability of taxpayers' money has led to a situation where AI has already spent over Rs 26,000 crore out of the Rs 30,000 crore that was assigned for its turnaround plan till 2022.
Sources say that the government will most likely follow the Pawan Hans disinvestment model. Last year, the government proposed to disinvest its 51 per cent stake in Pawan Hans Ltd through strategic disinvestment. Later, it withdrew the bidding document - after only two bidders showed interest - and revised the proposal. "There are enough bidders for Air India, but the government needs to address their concerns," says a source.
Given that Air India sale is a political hot potato, the government doesn't seem to have enough time on its side before the election season begins.