IndiGo rules out bidding for Air India; here's why

Budget carrier IndiGo, which had initially evinced interest in acquiring Air India's international operations, on Thursday said it was not in fray to bid for the national carrier as such option was not available under the disinvestment plan. "From day one, IndiGo has expressed its interest primarily in the acquisition of Air India's international operation and Air India Express. However, that option is not available under the government's current disinvestment plan for Air India.

"Also, as we have communicated before, we do not believe we have the capability to take on the task of acquiring and successfully turning around all of Air India's airline operations," president and whole time director of IndiGo Aditya Ghosh said in a statement.

IndiGo, a market leader in the Indian skies with close to 40 per cent share, was one of the first players to show interest in the ailing airline soon after the government gave its in-principal approval last June for the disinvestment of the national career.

It had written to the civil aviation ministry expressing its interest to buy out Air India's flight operations, particularly the international services.

On March 28, the ministry came out with the preliminary information memorandum on Air India's strategic disinvestment.

According to the memorandum, the government plans to offload 76 per cent equity share capital of the national carrier as well as transfer the management control. The proposed transaction would involve Air India, its low-cost arm Air India Express and Air India SATS Airport Services Pvt Ltd, which is an equal joint venture between the national airline and Singapore-based SATS Ltd.

Last July, IndiGo's founder Rakesh Gangwal had raised concern of having a joint ownership with the government in Air India during a conference call with investors and analysts, saying it was a "very very difficult proposition".

While virtually ruling out the possibility of running Air India along with the government, he also cautioned that it would be a "Shakespearean tragedy" if the national carrier's international assets go to a foreign entity.

IndiGo has been expressing concerns over the country's international air traffic being captured by Gulf carriers.

Against this backdrop, Gangwal had said that if a foreign airline was to get hold of Air India's international assets such as slots and landing rights, then the economic interests of that particular entity would be maximised.