Centre begins work on privatisation of Alliance Air & other Air India subsidiaries

After Air India, the Centre has now begun work on privatising its erstwhile subsidiaries – regional carrier Alliance Air Aviation, AI Engineering Services and AI Airport Services. The civil aviation ministry has begun a clean-up exercise, involving government guarantees that were given to Alliance Air.

Additionally, it will look at the infrastructure available with the other two subsidiaries and the HR issues, including manpower deployment, which will pave the way for seeking expression of interest over the next few months.

The sale of the entities will help the government garner some resources and recover some of the money it had pumped into Air India before it was sold. Of them, the engineering arm could see the maximum interest from potential buyers as the Tata Group has major fleet expansion plans.

Centre begins work on privatisation of Alliance Air & other Air India subsidiaries

A few renowned international airlines with large engineering subsidiaries are keen to forge alliances with Tatas to jointly run the maintenance shop here.

Alliance Air currently has a fleet of 19 turboprops – 18 ATRs and a made-in-India Dornier of HAL – and operates 115 daily departures on a network of 50 domestic destinations mainly in the north and Northeast India.

In April, almost three months after Air India’s privatization, Alliance Air announced that it had completed the process of becoming a standalone airline, which meant that it no longer relied on Air India’s network of bookings, customer service, or anything else.

The 800-employee-strong airline will induct two more ATRs by September and another HAL-made Dornier.

ALSO READ – Alliance Air to operate HAL’s Do-228 aircraft under UDAN-RCS

The 800-employee-strong airline will induct two more ATRs by September and another HAL-made Dornier. The regional carrier plans to start an international route – Chennai-Jaffna – soon, depending on the situation in Sri Lanka.

IndiGo is the only financially stable operator of regional flights using turboprops in India. Industry insiders said that apart from IndiGo and Tata-owned Air India, no other Indian operator as of now has the required financial muscle to successfully bid for Alliance Air.

ALSO READ – Celebi Aviation interested in bidding for Air India’s ground handling unit

AI Airport Services (AIASL), the ground handling arm providing services at airports, is facing its own issues right now. Citing a deterioration in its services causing flight delays, Air India had recently warned AIASL that it might opt for other service providers at some airports.

The engineering arm could see the maximum interest from potential buyers as the Tata Group has major fleet expansion plans.

ALSO READ – Air India may deboard AIASL as a ground handler from some airports due to flight delays

AIASL may see some interest from ground handlers already working at Indian airports. Last October, the government carved four subsidiaries out of Air India, while making the final preparations to return the Maharaja to the founder Tata Group along with Air India Express.

ALSO READ – EoI for the sale of Air India’s ground-handling division in the coming fiscal year

They were transferred to an SPV, Air India Assets Holding (AIAHL), at book value. The government retained INR 44,679 crore of Air India’s debt in this SPV which also got the subsidiaries, land and buildings. These will gradually be sold to pay off the debt.

While the dilapidated Centaur Delhi is set to be demolished, the Kashmir administration sealed the Srinagar property last month for violation of lease terms.

The fourth subsidiary, Hotel Corporation of India (HCI) runs Centaur in Delhi and Srinagar. While the dilapidated Centaur Delhi is set to be demolished, the Kashmir administration sealed the Srinagar property last month for violation of lease terms.

So there is nothing in HCI to be sold off for the government. Air India, handed to the Tatas this January, has so far been the most high-profile divestment of the Modi government.

(With Inputs from The Times of India)

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