‘Won’t sell AI if we don’t get right price’

The government will not sell Air India (AI) to a private player if it does not get the right price for it, according to a top official.

“The government retains the right to sell or not to sell Air India if the bid price is found to be inadequate,” said Civil Aviation Secretary R. N. Choubey on the sidelines of a press conference.

However, he was hopeful that the government would get the right price for the airline.

August end

He added that the successful bidder for the national carrier would be known by August end, subject to security clearances as well as the Directorate General of Civil Aviation verifying that the substantial ownership and effective control rests with an Indian as per FDI norms.

In March, the government made public the broad contours of Air India’s stake sale and invited bids. It proposed to sell 76% of Air India along with low-cost subsidiary Air India Express and a 50% stake in AISATS, a ground-handling joint venture with Singapore Airport Terminal Services, as a single entity. The new owner would also have to take on a debt of ₹33,392 crore.

As per the timeline prepared by the government, the deadline for submitting the expression of interest (EoI) for Air India bids ends on May 31, following which the government would select the qualified bidders by June 15 and place a request for proposal (RoP)which would be a more detailed document on the disinvestment of the carrier.

Floor price

The government would decide the floor price for Air India after the financial bids had been received, the senior official said.

The government aims at completing the sale of Air India by the end of this calendar year.

Aviation experts had expressed apprehension about the contours of the stake sale and said that the amount of debt, retaining Air India employees and government keeping 24% stake were deterrents for private players.

Mr. Choubey also met Revenue Secretary Hasmukh Adhia on Tuesday to press for bringing aviation turbine fuel (ATF) under the ambit of Goods and Services Tax (GST).

The Ministry of Civil Aviation has proposed that ATF, like bunker oil, be de-linked from petroleum products, and included under the GST. It has also proposed a model by which the shift is revenue-neutral by providing input tax credit.

He added that there had been a 40% rise in ATF rates in the past more than a year.

Jet fuel contributes almost 40% of an airline’s operational costs.