Air India is expected to transfer Boeing 747 aircraft which are used for VVIP flight operations to Alliance Air, as part of the new structure which will be put into place once Air India is sold.
Air India is expected to transfer Boeing 747 aircraft which are used for VVIP flight operations to Alliance Air, as part of the new structure which will be put into place once Air India is sold, sources aware of the development said. Alliance Air is the regional arm of Air India.
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The likely plan is to take these aircraft out of the Air India fleet, sources said, adding that while these are likely to be in the books of Alliance Air, it will not have operational control over the aircraft.
When the government offered 74 percent stake in Air India in early 2017, these aircraft were retained in the fleet of Air India.
"The 4 B747-400 aircraft are being used for VVIP flights on behalf of GOI (Government of India). These arrangements would continue and the aircraft retained in the fleet till the 2 new B777-300ER aircraft procured by the GOI for this purpose are ready for operations. The operations and maintenance of the two new B777-300ER aircrafts meant for VVIP operations would have to be carried out by Air India. The details would be provided at the time of RFP,” the preliminary information memorandum released in March 2017 had said.
These B747-400 aircraft will gradually be replaced by B777 aircraft which will join the fleet by the end of 2020, sources said.
"Three B777-300ER (owned) aircraft are on order…(two of these are being procured on behalf of GOI and are being financed by GOI, these aircraft are meant for VVIP operations),” the government had clarified.
The government plans to sell its 100 percent stake in the national carrier in the second attempt as compared to 74 percent stake on offer in the earlier attempt. The government had found no takers in the last round of Air India privatization but expects interest from "several parties" in this round.
Defending its move to privatise Air India, senior government officials have repeatedly said that the government should not be in the business of running an airline and its sale is also considered to be one of the much-needed reforms in the Indian civil aviation sector.
"The government has decided to disinvest Air India due to its fragile finances and its continued and accumulated losses. Further financial support to revive the airline in a mature and competitive aviation market would not be the best use of scarce financial resources of the government,” union aviation minister Hardeep Singh Puri had said in a written reply to Lok Sabha.
While Air India is burdened with debt and liabilities over Rs 80,000 crore, the government is hopeful of finding a buyer this time as it is selling the airline with "reasonable debt."
Of the total liabilities amounting to around Rs 22,000 crore, payables to Airports Authority of India amount to nearly Rs 2,500 crore, advance bookings are worth Rs 2,000 crore, dues to oil companies are nearly Rs 4,600 crore and there are other payables under the heads of catering services, among others, sources added. "These figures are rising every day."
The government is likely to provide a window of 45 days to bidders for submission of preliminary bids, sources said. It is widely expected that the government will invite expression of interest, issue share purchase agreement and preliminary information memorandum on sale of Air India this month.
On January 7, a ministerial panel led by union home minister Amit Shah approved the draft of expression of interest and share purchase agreement for selling the government's stake in Air India, sources close to the development had told CNBC-TV18.
While the union finance minister Nirmala Sitharaman had said in her July 2019 union budget speech that the government may look at liberalising foreign direct investment in the aviation sector, no measure has been announced since then in this regard.
As per the current FDI norms and Aircraft Act, foreign airlines are allowed to own up to 49 percent stake in Air India as the substantial ownership and effective control has to stay with Indian nationals.
First Published: IST