Tata Group unlikely to participate in Air India sale, Says Sources

Image of Jet Airways aircraft used for representation

India's steel-to-autos conglomerate Tata Group, widely seen as a potential suitor for Air India, is unlikely to consider a bid for the state-run carrier as the government's terms are just too onerous, two sources familiar with the matter said.

Vistara declined to comment on Wednesday.

So far, only Etihad Airways and Singapore Airlines have confirmed their interest in buying the national carrier in which the Indian government plans to sell a 76 per cent stake.

Days after domestic airlines like IndiGo and Jet Airways fell out of the running to buy Air India after a disagreement with the terms of sale, worldwide airlines such as British Airways and Singapore Airlines have shown interest in buying the Indian state-run carrier, Fortune India reported citing a senior Air India official.

British Airways' parent company International Airlines Group in a response to TOI said: "IAG doesn't comment on rumours or speculation".

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The forum comprises nearly all or the airline unions such as Air Corporations Employees Union, All India Service Engineers' Associations, Air India Employees Union, Aviation Industry Employee Guild, Air India Aircraft Engineers' Association, All India Aircraft Engineers' Association, Air India Engineers Association, United Air India Officers Association, All India Cabin Crew Association and All India Airline Retired Personnel Association. "A leading Indian industrial house is also in touch".

India's ministry of civil aviation, keen to sell the loss-making, debt-ridden airline, finalised plans in late March to divest a 76% stake and offload about $5.1 billion of its debt.

But the government has stipulated the winning bidder can not merge the airline with existing businesses as long as the government holds a stake. Bidding can be done as a single player or as part of a consortium. The last date for submission of Expression of Interest is May 14 and intimation to the qualified interest bidders would be made on May 28. Both the airlines found the terms and conditions laid out in the proposal simply not workable.

Global aviation consultancy, Centre for Asia Pacific Aviation (CAPA), pitching for more liberal norms for the sale of Air India sale said that brand, labour and higher-than-expected debt continue to be major deterrents for potential bidders of the national carrier. The idea of going purely by the actual bids received rather than the posturing by potential investors is to make sure the disinvestment in Air India is truly a market-driven process.

A lack of interest from Tata is likely to put pressure on the government to rethink its terms or even the structure of the sale. Last year, Tata Sons Executive Chairman N Chandrasekaran in an interview had said that the group was interested in buying Air India but was waiting for the details.

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