Financial bids for Air India in process with bids from Tata Sons and SpiceJet

At least two entities are expected to submit financial bids on Wednesday, September 15 for Air India, marking an important milestone in the government’s plan to privatise the national carrier.

A subsidiary of Tata Sons, Talace Pvt Ltd, and SpiceJet promoter Ajay Singh have officially bid for Air India, paving the way for the government to fully exit the loss-making national carrier. The national carrier and its subsidiary Air India Express may have together been valued in the range of INR 15,000-20,000 crore by Tata, according to people familiar with the bidding process.

“The valuation is a rough estimate of the assets (aircraft) owned by the beleaguered airline being sold by the government,” said the people cited above.

Tata winning Air India would be a homecoming of the airline for the group, which had transferred the company to the government in 1953. (Image Courtsey - MoneyControl)

The board of Tata Sons had given a free hand to its chairman on the bid, mentioning a price range the group would be comfortable paying for the troubled carrier. “The bid is quite within that range mentioned,” an official aware of the matter said.

Among the suitors, sources confirmed is the Tata Group, which is also the frontrunner. Tata winning Air India would be a homecoming of the airline for the group, which had transferred the company to the government in 1953.

The Tata Group is set to bid through a holding company and the group has also convinced SIA, its joint venture partner in Vistara, to integrate the network with Air India, if they get it.

The government will sell a 100% stake in Air India and its low-cost subsidiary Air India Express, and 50% in ground handling company Air India SATS. “Financial bids for Air India disinvestment received by transaction adviser. The process now moves to the concluding stage,” Tuhin Kanta Pandey, secretary in the Department of Investment and Public Asset Management (DIPAM), tweeted on Wednesday, September 15.

https://twitter.com/SecyDIPAM/status/1438105827789840392

‘Future Plans to Keep Evolving’ The winning bid is likely to be announced before the end of this month and the government plans to transfer the airline by the end of this fiscal year. Once the government announces the winner, Tata Sons (if it is shortlisted) is expected to create one holding company for all its aviation businesses, possibly under Talace.

“Talace has just put in the bid. Future plans will keep evolving. What the group is looking at in terms of valuations is just pureplay aircraft on the books of Air India and Air India Express, especially the ones owned by them,” the people close to the bidding process said.

Talace was incorporated in August 2020 purely to make an official bid on behalf of Tata Sons, sources said. Directors include Eruch Noshir Kapadia, Saurabh Mahesh Agrawal and Nipun Aggarwal. SpiceJet promoter Ajay Singh has also put in a bid in his personal capacity along with two other investors

As per the Air India EoI floated by DIPAM in January 2020, of the airline's total debt of INR 60,074 crore as of March 31, 2019, the buyer would be required to absorb INR 23,286.5 crore.

The government has finally succeeded in getting financial bids for Air India in its second attempt, as the first in 2018 did not elicit any interest because it had planned to retain a 26% stake even after privatising the national carrier.

Debt Transfer Air India will be transferred with a debt of INR 23,000 crore, while the rest of its debt will be transferred to government-owned Air India Asset Holdings Ltd (AIAHL), which will house the carrier’s assets like the Air India building in Mumbai, Airlines House in Delhi, four acres of land in Delhi’s Connaught Place and various housing societies in Delhi, Mumbai and other cities.

Subsidiaries such as Air India Engineering Services Ltd and Air India Air Transport Services Ltd will also be part of AIAHL. The government plans to monetise these assets and repay that portion of Air India’s debt which it will hold on to after handing over the carrier to its new owners. Before the handover, the government may have to take on at least INR 20,000 crore more of debt which the airline had accumulated over the past two years. In 2018, the government had transferred to itself debt worth about INR 22,000 crore from the airline.

At present Air India has control over 4,400 domestic and 1,800 international landing and parking slots at domestic airports, as well as 900 slots abroad.

As per the Air India EoI floated by DIPAM in January 2020, of the airline's total debt of INR 60,074 crore as of March 31, 2019, the buyer would be required to absorb INR 23,286.5 crore. The rest would be transferred to Air India Assets Holding Ltd (AIAHL), a special purpose vehicle.

Air India’s subsidiaries such as Air India Engineering Services and Air India Air Transport Services will also be part of AIAHL. At present Air India has control over 4,400 domestic and 1,800 international landing and parking slots at domestic airports, as well as 900 slots abroad.

HAL, the defense PSU seems to be on a roll as it signs yet another deal, this time with Rolls Royce for "Make in India" Ardour engine parts. This comes just days after the PSU signed a contract with GE Aviation(USA) for the acquisition of 99 F404-GE-IN20 engines which would power the indigenously made LCA Thejas.

This would be a follow-up to the MoU signed by Rolls-Royce and HAL during the Aero India 2021 to establish an authorized maintenance center for Adour at HAL to support international military customers and operators.

The Indian Express

This is the first order for the supply of spares for the Adour Global Supply chain. We plan to be a key player in the supply chain of Adour engines and expect more orders to follow. We look forward to working with Rolls-Royce to build on this capability to serve the global market for the supply of spares and MRO of Adour enginesHAL said in a press statement

HAL CMD, Mr. R Madhavan believes that with over 30 years of experience in providing support repair and maintenance services for the Adour engines in India, HAL is now ready and possesses the capacity to handle a large defense customer base.

Our valued partnership with HAL has grown from strength to strength over the last few decades and this is a significant step towards strengthening the defence manufacturing ecosystem in India, and to help catapult India’s vision for the defence sector to ‘make in India’ for the worldKishore Jayaraman, President, Rolls-Royce India and South Asia from Rolls-Royce said

Kishore Jayaraman / DNA India

Alex Zino, Executive Vice President – Business Development and Future Programmes (Defence), Rolls-Royce, chimed in his thoughts- " We are excited to expand our long-standing partnership with HAL to support long-term sustainment of our Adour engines for both Indian and global customers".

He further stated the MoU signed would create opportunities in India to increase its defense exports now that the demand forecasted for high precision equipment is high.

COVER: The News Minute

The board of the Airport Authority of India has approved to privatise 13 airports. This is the first major asset monetisation exercise by the government as part of the National Monetisation Pipeline. The government is aiming for private investment of INR 3,660 crore in airports by FY24.

The AAI board has approved the privatisation of six major airports-- Bhubaneshwar, Varanasi, Amritsar, Trichy, Indore, Raipur—along with seven smaller ones in Jharsuguda, Gaya, Kushinagar, Kangra, Tirupati, Jabalpur and Jalgaon, according to sources. The smaller airports will be clubbed with the six major airports for scale and size, thereby making them attractive for investors.

AAI will now appoint a consultant to prepare the bid document and determine the concession period and reserve price. The bids are likely to be called by early 2022.

The board of the Airport Authority of India has approved to privatise 13 airports. 

This is the first time the model of clubbing major airports with smaller ones will be used in the airport privatisation exercise.

“To ensure commensurate development of non-profitable airports along with the profitable airports with the help of private sector investment and participation, pairing /clubbing of smaller airports with each of the six bigger airports and leasing out as a package is being explored.” The National Monetisation Pipeline document prepared by Niti Ayog

While Jharsuguda airport will be bundled with Bhubaneswar, Kushinagar and Gaya airports will be clubbed with Varanasi. Kangra, Amritsar, Jalgaon and Trichy airports will be clubbed with Raipur Jabalpur, Indore, and Tirupati airports, respectively.

Prospective investors and consultants said airports would see good participation from bidders, though there will be pressure on valuation. They pointed out that Varanasi along with Gaya and Kushinagar will attract investor interest as all three airports fall on the Buddhist circuit and typically get international visitors.

"This round of privatisation could very well be the last chance for an entity looking to enter India's airport sector. With returns assured on aero assets, some of the existing players will look to increase their scale rather than allowing fresh entrants and competition." Jagannarayan Padmanabhan, Director and Practice Leader (transport and logistics), CRISIL

The regulatory regime followed in India gives airport developers a return on investments to upgrade assets through passenger fees, landing and parking charges as well as fuel charges. The return remains fairly visible and stable, according to analysts.

In the last round of privatisation, the Adani group bid aggressively to win all six airports- Ahmedabad, Jaipur, Lucknow, Thiruvananthapuram, Mangaluru, and Guwahati. The bid amount in some cases was double that of the second highest bid.

The Adani Group will soon take over Jaipur, Guwahati and Thiruvananthapuram airports and also build Navi Mumbai Airport. (Image Courtsey - Ahmedabad Mirror)

The airpots being developed and run PPP way so far include those at Hyderabad, Bengaluru, Delhi, Mumbai, Kochi, Ahmedabad, Lucknow and Mangaluru. The Adani Group will soon take over Jaipur, Guwahati and Thiruvananthapuram airports and also build Navi Mumbai Airport. All these airports were privatised on a standalone bases. The promoter of Mumbai Airport gets the right to build Navi Mumbai Airport.

According to rating agency ICRA, the aggressive bidding would result in a windfall for the AAI, which could earn more than INR 600 crore per year as concession fees from the Adani group.

However, a senior government official involved in NMP said the government had done a study and gauged investor appetite in airport projects following the impact of Covid-19 on aviation. The study showed that despite the decline in passenger traffic and revenue of airports due to the pandemic, investor interest continues to remain stable.

(With Inputs from Business Standard)

Union Minister of Civil Aviation Jyotiraditya Scindia on Saturday, September 11 laid the foundation stone of the new building of the GMR School of Aviation at Special Economic Zone of the Hyderabad International Airport.

Spread across 75,000 square feet on a 4-acre campus, the school will be developed in two phases. The construction of the building under phase I will commence from October 2021 and it is expected to be operational by June 2022.

Mr Scindia congratulated the GMR Group for taking the next steps in training and building human resources in the aviation sector in the country.

https://twitter.com/JM_Scindia/status/1436701957004029952

GMR School of Aviation, which is affiliated with National Aviation University, will be constructed by GMR Aero Technic (MRO) and GMR Aviation Academy, the aviation consultancy arm of GMR Airports Ltd— the holding company of the airports vertical of GMR group.

GMR Group has launched the first of its kind School for Aviation in India, catering to the needs of the growing aviation and aerospace industry for skilled personnel. The school will have Airbus as the proposed knowledge partner. It aims to be a premier Aircraft Engineering School, meeting International standards in terms of facility and quality of education.

“With the tremendous growth in the aviation sector in India, there has been an increasing demand for qualified and skilled aircraft maintenance personnel. To fulfil this demand, the GMR group came up with the idea to have a training institute for aircraft maintenance. The institution will give graduates a platform to kick-start their careers in the aviation industry. The training school will be well equipped with modern facilities, training devices with access to various national and international study resources. We hope that our academy will pave the way to inspire youngsters to dream of an aviation career.”GBS Raju, Business Chairman, GMR Airports

https://twitter.com/RGIAHyd/status/1436698313806385159

GMR School of Aviation will offer integrated DGCA-147 and EASA -147 approved courses. Recognized by DGCA India and EASA, students can pursue DGCA - B1.1 and B2 Aircraft Maintenance Engineering licensing program, EASA - B1.1 and B2 Aircraft Maintenance Engineering licensing program, Aircraft Specific Type Training Courses (From 2nd year of operation) and Ancillary Courses like Aircraft structures, Aircraft composite courses, Human Factors, Fuel Tank Safety, Safety Management System etc. (From 2nd year of operation) from the academic session 2022-2023.

From the academic session 2022-2023, courses will have an intake of 100 students for DGCA programs and 40 students for EASA in the initial years. The school will be affiliated with the National Aviation University and provide a degree-level graduate program to the students and various other certificate courses said a press release.

A Delhi-bound Air India flight had to abandon take-off after suffering a bird-hit while ascending on the runway of the Swami Vivekanand Airport in Raipur on Tuesday, September 14, officials said.

Flight AIC 469, with 179 passengers on board, was leaving for Delhi from the Chhattisgarh capital when the plane suffered the bird-hit at 10:05 AM, following which the take-off was cancelled, Raipur Airport Director Rakesh Ranjan Sahay said.

"The passengers were subsequently de-boarded. Pieces of a bird's carcass were found during the inspection of the runway by the airport staff. The Air India's engineering personnel are inspecting the aircraft." Rakesh Ranjan Sahay, Director, Raipur Airport

Union Minister of State for Tribal Affairs Renuka Singh was also among the passengers. She was going to Delhi to attend a meeting of the Union cabinet, her personal staff said.

According to officials, sometimes, bird hits cause major damage to an aircraft.

A bird hit can cause major damage to an aircraft. (Image Courtsey - The Hindu)

The exact damage caused to the Air India aircraft here will be ascertained after a complete inspection by the engineering staff, they added.

This is not the first time when an incident like this has taken place. In June 2021, a Bengaluru-bound IndiGo flight suffered a bird hit which caused severe damage to its engine. Researchers revealed that the majority of the bird-hits during the monsoon occur because flying termites become active in the season.

After a delay of about 8 months, the final report on the Kozhikode air disaster is out and one can't help but notice it emphasizes more on human error and non-compliance of SOPs as the major factor contributing to the accident.

While that may be true to an extent, air accidents don't take place due to a single factor and often times it's a result of numerous variables going wrong, that ultimately leads to a fatal incident.

So was it just blatant human error and non-compliance that led to the fateful crash of IX1344? Turns out there's more than meets the eye. Let's have a look.

Now that the final accident report is made public, although it does point out specific issues, it still fails to make a definitive conclusion of the accident.

Table top runway

Mangalore tabletop runway / Chat Zozo

Constructed on elevated terrain and mostly with very less space for last minute manoeuvres- table top runways pose a challenging risk to any pilots landing their aircrafts. India has 5 table top runways including the one at Kozhikode.

Tabletop runway at Kozhikode airport

Consequently, under/over shooting the runway can have disastrous consequences, as was the case with the Kozhikode crash.

Role of DGCA

DGCA is the watchdog of Indian Civil aviation and is primarily responsible for all aspects of Indian aviation, including safety.

Considering the risky runway that it has, it was only imperative that adequate safety buffers be installed where safety is critical. But, it was not to be.

Following are the minimum requirements to be met at Kozhikode airport:

1. The official publication of the Airports Authority of India(AAI) and the Aeronautical Information Publication(AIP) show an incorrect RESA with dimensions 240*90 m on either sides of the runway.

2. The reported undershoot RESA of minimum 90 X 90 m is neither notified nor published in the AIP. Furthermore, the source of the drawings aren't mentioned and the dimensions of the RESA mentioned are factually incorrect.

3. ICAO has emphasized that should there be a slope preceeding the runway, approach lights can be installed on the slope, something which neither the AAI nor the DGCA complied with.

4. DGCA had allowed AAI to operate the airport without the installation of CAT I ILS approach light system. The final report appears to have defended this, attributing the reason as "non-availability of land".

5. Absence of runway centrelights. The DGCA hasn't enforced the installation of these lights stating the lights are required to be installed only if the runway width is 50m and more. Width of the Calicut runway happens to be 48.5m. The Etihad airways accident report had also recommended that runway centrelights be installed at Calicut airport.

6. The perimeter road at Calicut airport have been found too narrow for more than a fire tender to pass through. Subsequent audits raised concern for the perimeter to be two-laned. The AAI complied , only to be later closed by the DGCA. In a further mockery of the system, a white divider was painted on the road keeping the width of the perimeter the same as before.

Safety Management System(SMS)

Baldwin Aviation

Regardless of the industry, safety is paramount. ICAO has mandated certain timelines for the implementation of safety management system. Clearly India fails to comply with the set standards as is evident from the AIX crash.

The accident report mentions that the pilot had Type II diabetes. Such acute conditions can severely affect the depth perception of an individual. The pilot's training record has reportedly highlighted several issues with regards to landing flare height and decision making. Training and medical, work in tandem with each other.

This points to the ineffective SMS in practise, which, otherwise would have connected the dots between the two and called for appropriate corrective action.

These are just few of the many variables that are involved. Safety and effective training are an indispensable part of any Commercial Operation program and hence they need to be prioritised equally. And soon. As is said, every accident is an event that could have been prevented in the first place.

So, what do you think? Was the air disaster at Kozhikode solely due to human error or was it a combination of all sorts? Let us know in the comments below

COVER: IndiaToday