Will not pursue AI bid if it is not profitable, IndiGo president tells staff
IndiGo, the country’s largest airline with a domestic market share of a little over 41 per cent, is keen on snapping up the international operations of Air India and its low-cost arm Air India Expressbusiness Updated: Jul 10, 2017 08:29 IST
Having joined the race to buy out Air India, IndiGo president Aditya Ghosh has told employees that it will not embark on the journey if it is not profitable and jeopardises interests of the airline.
IndiGo is the first airline to formally express interest in loss-making Air India soon after the government decided on its disinvestment .
IndiGo, the country’s largest airline with a domestic market share of a little over 41 per cent, is keen on snapping up the international operations of Air India as well as its profitable low-cost arm Air India Express.
As an alternative, the budget carrier is “equally interested” in buying out all the operations of Air India and Air India Express, according to the letter sent by Ghosh to the civil aviation ministry.
After showing its interest in Air India disinvestment -- a development which was first announced by the ministry -- Ghosh wrote to IndiGo staff listing out the reasons behind the move and sought to assure them that every action would be in the best interest of the airline.
“Let me be very clear that if it is not profitable and does not add value to our employees, customers and shareholders, we will not embark on this journey,” Ghosh, who is also a whole-time director, told employees on Thursday.
“As one of those who bleed blue and who have helped build this great organisation, you can rest assured that your leadership team and the founders of IndiGo will never do anything to jeopardise what you helped build and will always act in the best interest of IndiGo,” he said.
Confidence boost for aviation
Noting that IndiGo is primarily interested in Air India’s international operations, Ghosh said that over the past decade, a significant domestic network has been created which gives confidence to build a world-class international airline in the scale and scope of some of the largest airlines in the world.
With a fleet of nearly 135 aircraft, IndiGo operates over 900 flights on an average every day. Besides, the carrier has more than 450 planes on order.
In his letter to the employees about interest in Air India, Ghosh stressed that without IndiGo’s domestic feed network, it does not make sense to embark on this journey.
“... if we do go down this path, it would require significant restructuring of the acquired operations. In that journey, we are not going to take on debt and liabilities that could not be supported by the new restructured operations,” he noted.
Asserting that IndiGo will not embark on the journey if it is not profitable, Ghosh said the leadership team and the founders will never do anything to jeopardise what has been built.
Concern over access to aviation market
As it pursues aggressive plans, IndiGo has also flagged concerns over some overseas airlines being given “disproportionate access” to the Indian aviation market.
“Over time, India has allowed disproportionate access to airlines of some of the city states in the Middle-East and South-East Asia. The massive hubs that these airlines have built significantly benefited at the expense of India.
“As a consequence of this, India’s international air transportation hubs reside outside the geography of our country. It is time for India to take back its fair share of international traffic and bring back this economic wealth to where it rightfully belongs,” Ghosh said in the letter, dated January 28, written to the ministry.
Before IndiGo made this letter public on Thursday, Civil Aviation Secretary R N Choubey had said IndiGo has written a letter with an unsolicited expression of interest in the divestment procedure of Air India.
The Cabinet has decided to form an Air India-specific Alternative Mechanism to take forward the disinvestment plan.
Various issues, including the treatment of unsustainable debt of Air India, hiving off certain assets to a shell company and de-merger and strategic disinvestment of profit- making subsidiaries, will be looked into.
Air India has a debt burden of over Rs 50,000 crore and is staying afloat on taxpayers’ money.