The Indian government plans to allow foreign investors to buy up to 49% of shares in Air India (AI, Delhi International) in the hopes this will render the privatisation of the state-owned carrier more competitive, Hindustan Times reported.
The proposed change will still retain a differentiation between Air India and other air operators in India. Existing legislation allows for full foreign ownership of all airlines except for the flag carrier, although not more than 49% of share can be held by foreign airlines. In Air India's case, the foreign capital will be limited to a 49% stake regardless of whether the investor is an airline or another company.
According to sources cited by the Hindustan Times, the decision to change the law has already been taken but its implementation might take some time due to a number of rules that need to be amended.
Because the new rules will ensure that Air India will remain under Indian control, the carrier will not need to reapply for traffic rights after privatisation.
Thus far, a number of Indian companies have expressed an interest in buying either the whole or parts of Air India, including SpiceJet, IndiGo Airlines, Jet Airways and Tata Group-controlled AirAsia India and Vistara, but the government hopes that by changing the law it will also attract foreign groups. The aviation ministry has decided against separating short-haul and long-haul parts of the carrier's operations.
“The government is going to sell a clean Air India to prospective bidders by putting all the tricky aspects like real estate in an SPV. We have devised a mode where the new owner will get a clean airline free of most of its past baggage,” said a top government source cited by The Times of India. The government will also hive off Air India's debt, which amounts to INR487.8 billion (USD7.6 billion), according to The Hindustan Times.
