KEY POINTS

·        The government has tweaked the terms of sale with room for more changes  and is now putting 100% of its equity in the airline on the block.

·        The government has also laid down a principle for calculating debt, which will be bundled with airline, and relaxed the minimum net worth criteria for potential bidders to Rs 3,500 crore from the Rs 5,000 crore in 2018.

What will the new investor get?

·        The most attractive proposition in acquiring Air India is the slots and landing rights that it holds at airports such at Delhi, Mumbai, London, New York, Chicago, Paris, etc.

·        These could be helpful both to airlines looking to expand into long-haul international operations, and to entities looking to set up global operations from scratch.

How will consumers and employees be impacted?

CONSUMERS:

·        If and when Air India is taken over by a private entity or consortium, experts believe the first move could be pruning of operations to ensure the airline inches closer to profitability.

·        This could cause Air India to cease operations on certain loss-making domestic and international routes — leading to a rise in fares.

·        Cutting certain routes could also impact consumers in terms of the unique offerings by Air India, such as higher baggage allowance, etc.

EMPLOYEES:

·        Air India’s bloated staff strength was flagged by potential investors in the last disinvestment attempt.

·        Air India’s Chairman and Managing Director insisted that the airline did not have any “excess staff”.

·        The government is expected to provide more clarity on conditions for retaining staff in the request-for-proposal stage, which will come after expressions of interest are received.

So will the airline be finally sold?

·        A lot also depends on the global politico-economic scenario that enables bidders, from India or abroad, to show interest in acquiring the loss-making airline.

·        Given that there are specific parts of the airline that are considered attractive for different entities, experts are of the view that if this second attempt too fails, the government will have no choice but to take a piecemeal approach at divesting the national carrier.

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