After the successful divestment of Air India a year ago to the Tata group, the government is now looking to fully divest low-cost carrier Alliance Air and AI Engineering Services (AIESL), the country’s biggest MRO (maintenance, repair & overhaul) company.
Speaking at the CAPA India Aviation Summit, Rajiv Bansal, secretary, ministry of civil aviation, said that the process of disinvestment of both the companies will be done simultaneously. Expressions of interest (EoIs) will be invited by the government in due course.
The first step of holding roadshows for the divestment of AIESL has been done and so has the second step of approval from the group of ministers. Only the last step of approval from the government’s alternative mechanism is pending, the civil aviation secretary said.
“AIESL has a healthy top line and bottom line. We are confident that there will be a good number of interested parties showing interest. This will be a 100% disinvestment. Two stages of the process are complete and we are into the final stage. In a couple of weeks, the clearance should come in followed by the formal EoI,” Bansal added.
Air India, Singapore Airlines, Etihad, Qatar Airways and China Eastern are some of the several clients of AIESL. The state-owned entity reported a net profit of `844 crore during FY22 against `5 crore reported in FY21. It handled 450 aircraft during FY22, as per its annual report.
“Once the disinvestment of AIESL goes through, hopefully in a couple of months from now, this will also augur well for the Indian aviation industry,” Bansal said.
The divestment of Alliance Air has been in the works since the middle of last year but there hasn’t been any formal EOI. Alliance Air, which has a fleet of 18 ATR-72-600 aircraft, recorded a net loss of `447 crore during FY22, an increase over FY21 when the company posted a `359-crore net loss.
Bansal added that the government is also working towards the privatisation of smaller airports and 25 airports have been identified for PPP (public private partnership) under the national monetisation plan, of which 11 will be privatised first.
The Indian aviation market, comprising eight major airlines, is plagued by supply chain issues, leading to the grounding of nearly 110 aircraft. As many as 30 aircraft each of SpiceJet
The government has taken up the issue with the engine makers, Bansal said, adding that the grounding of the aircraft has led to capacity constraints.
“We have taken it up with the engine makers and our minister also spoke to them. They have global supply chain issues and we have requested them to fast-forward supplies to us because a large number of our aircraft are grounded and that is impacting and impeding growth of the sector. They will respond this week,” he added.