‘Acquiring AI, integrating Vistara, AirAsia India would place them in big league’

As the bidding process for Air India’s disinvestment enters its next phase in the coming week, the Tatas are expected to emerge as a serious bidder for the carrier.

For, with Air India (AI) they could potentially become a significant player in the aviation sector by consolidating AirAsia India and Vistara with Air India, analysts said.

The winning bidder for Air India will also acquire its profit-making and low-cost subsidiary, Air India Express.

‘Vacuum left by Jet’

“No Indian carrier so far has filled the void created by the closure of Jet Airways,” said Jitender Bhargava, aviation author and former executive director of Air India.

“India needs a strong carrier that can have significant presence in international routes. The Tatas have that potential,” he added.

“By acquiring Air India, they can get into the league of major carriers once they combine AirAsia India and Vistara under its fold. Vistara on its own will take a long time to have any major presence in international sectors but with Air India, there will be a vast difference. Air India only needs a professional management to make a turnaround,” he said.

A spokesperson for Tata Sons declined comment on the matter.

On Wednesday, the Tatas raised their stake in AirAsia India to 83.67% from 51%, for ₹280 crore.

Ansuman Deb, research analyst, ICICI Securities, said in a report that the Tata group had demonstrated its commitment to aviation as its portfolio includes majority stakes in Vistara and AirAsia India and it remains a possible bidder of AI.

Stage 1 of the bidding process for AI has begun. Multiple bidders including the Tatas, and a section of Air India employees backed by U.S.-based fund Interups Inc. have submitted expressions of interest and they will be shortlisted based on eligibility criteria. “In stage 2, starting January 5, shortlisted bidders will be provided with a request for proposal and then, there will be a… bidding process,” he said.

‘Four-player arena’

If the Tatas acquire Air India and consolidate Vistara and AirAsia India under it, the sector will change from a six- player to a four-player industry comprising the Tatas, IndiGo, SpiceJet and Go Air, Mr. Deb added.

The Tatas would then have domestic market share of 23.2% (Air India 10.3%, Vistara 6.3% and AirAsia India 6.6% as at November 2020). IndiGo is the dominant player with 53.9% share.

In 1953, Tata Airlines, which was founded by JRD Tata, was nationalised and became Air India.

Source: Read Full Article