Air India privatisation: Will IndiGo exit force govt to ease bidding terms?

Following IndiGo’s decision of not bidding for state-run Air India, the government might be pressured to tweak some of the key areas in the preliminary information memorandum that, according to many carriers, make it difficult to bid for the national carrier.

There is no doubt, say experts, that IndiGo was the only domestic airline with the cash reserves (over Rs 120 billion) and management wherewithal to turn around Air India. It was also the only carrier that met the net worth criterion of Rs 50 billion on its own. Now, IndiGo’s withdrawal from the race is surely a major setback for the government, and it also raises the red flag for other potential bidders.

The other two aviation companies that have reportedly shown interest in Air India are Tata-SIA and Jet Airways with KLM, though the latter does not have a great financial health. The names of Air Asia, SpiceGet, Go Air and Qatar Airlines, and even the Adanis, have been doing the rounds, but many of them have denied or not commented on the issue.

According to an aviation analyst, “the IndiGo decision is good in one way, as it will make the government rethink – you cannot push so many clauses down a buyer; they will rethink (their interest in bidding).” Global consultants to airlines say that most carriers are looking for more clarifications on some key issues before they would take a decision.