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4 Indian airlines interested in Air India stake sale: Report

CAPA also expects Air India’s domestic and international airline operations, including budget subsidiary Air India Express, will be sold as a single entity while subsidiaries such as aircraft maintenance, catering, ground handling and hospitality will be hived-off.

business Updated: Jan 30, 2018 23:22 IST
Tarun Shukla
Tarun Shukla
Livemint
Air India,AI stake sale,IndiGo
Bidders will be expected to be asked to submit a business plan for a 200 aircraft airline within 5 years and tender conditions are expected to be designed to attract investor interest.(Mint File Photo)

New Delhi More Indian airlines could show interest in the flag carrier Air India, consulting firm CAPA has said in its 2018-19 outlook released in Mumbai on Tuesday.

“Up to four Indian carriers could express interest – Jet Airways, IndiGo, SpiceJet and Vistara,” in Air India, CAPA said in its report “Indian Aviation: Review of FY2018 & Outlook for FY2019”

IndiGo has already shown interest while Tata’s which run Vistara has said they too would like to see the terms and Singapore Airlines, a Tata partner in Vistara has also not ruled out interest.

Bidders will be expected to be asked to submit a business plan for a 200 aircraft airline within 5 years and tender conditions are expected to be designed to attract investor interest.

CAPA also expects Air India’s domestic and international airline operations, including budget subsidiary Air India Express, will be sold as a single entity while subsidiaries such as aircraft maintenance, catering, ground handling and hospitality will be hived-off. Real estate will be transferred into a special purpose vehicle and working capital debts will restructured.

Meanwhile, India’s air traffic is also likely to cross 150 million passengers by next fiscal CAPA said

“Domestic traffic expected to grow by 18-20%, crossing 150 million annual passengers, with capacity growth closer to 25%,” the firm said

The domestic traffic will touch 125 million by March 2018 alone and international traffic will be 65 million.

Growth could however be hampered because of capacity issues.

“Growth may be tempered to 15% if some capacity if some aircraft inductions are delayed. International traffic to grow by 12% or more, to reach 70-75 million passengers,” it added.

The firm expects the airline industry to post a loss of $350-375 million. IndiGo, SpiceJet, GoAir and Jet Airways are likely to be profitable while Air India, AirAsia India and Vistara are likely to be unprofitable.

The airports sector could see an IPO by GMR group which runs Delhi and Hyderabad airports besides those outside.

“IPO by GMR is likely. Disinvestment of MIAL (GVK group-run Mumbai International Airport Ltd) cannot be ruled out after it won the concession for Navi Mumbai Airport. Both GVK and especially GMR likely to focus on international opportunities,” it added.

CAPA expects IndiGo’s fleet size to reach over 230 by 2018-19 from 153 currently. IndiGo has 445 planes on order.

Jet’s fleet size is likely to touch 122 from current 117.It has 86 planes on order.

SpiceJet’s fleet is likely to touch 69 from 53 with its 200 planes on order.

GoAir’s fleet is likely to touch 52 from 32 currently and 131 planes on order

Air India’s 148 fleet could also see additions of about 16 planes.

Vistara is likely to have 22 planes from current 17. It has 3 planes on order.

The government’s Udan regional connectivity scheme is finally getting some traction, the report said.

“With commitments by IndiGo, SpiceJet, Jet Airways and Alliance – who have won over 50 routes - RCS is finally gaining traction,” it added but cautioned that “RCS needs to be restructured to make it viable”

The firm does not see any bilateral flying rights expansion expected until 2019 and “with foreign carriers constrained, international expansion will be led by Indian airlines”

IndiGo and SpiceJet likely to debut Long Haul LCC operations from this winter or summer next year with IndiGo expected to induct 7 x A321s in 2018, with 30% higher capacity, to be deployed in Mumbai

CAPA estimates that the aviation safety regulator DGCA is short of 700-800 staff relative to its responsibilities.

“The regulator is severely lacking in resources and skills,” it said adding, “Organisation is unwilling to change and is increasingly ineffective An independent CAA along the lines of the UK is required as soon as possible”

First Published: Jan 30, 2018 23:22 IST