Foreign airlines must be allowed to bid for Air India: IATA chief executive

The government should sell its entire stake in Air India (AI) and also allow foreign airlines to bid for the Indian carrier, International Air Transport Association (IATA) chief executive officer Alexandre de Juniac has said.

"We support privatisation of Air India. But the company has to be privatised in right conditions," De Juniac told Economic Times.

"For sale process, the government can keep a part stake initially but the government should eventually exit Air India. The government could allow foreign carriers also to bid for Air India. We do not see any problem in countries owning a stake in any other carrier, as various global carriers have such stake, recognising that the government have to decide on the limits of it," he added.

The government, on the other hand, is looking to sell a majority stake. However, the advisors appointed for the sale of the national carrier also suggested that completely exiting the airline is the best option and will maximise valuations too.

Earlier this month, reports had suggested that Union Minister of State for Civil Aviation Jayant Sinha confirmed that the Tatas had formally shown an interest in Air India's stake sale.

Reports also suggest that besides Tata Group and Indigo, Jet Airways and SpiceJet are also seeking to join the race to bid for the debt-ridden Air India.

"The economics of the game will change completely for whichever airline gets Air India. With its 14 percent domestic and 17-18 percent international market share, getting AI will be a paradigm shift for the successful bidder. Other airlines like Jet and possibly even SpiceJet will have no option but to bid for AI," a top government official close to the matter had said.

The Union Cabinet on June 28 had given an approval for disinvestment of the debt-ridden state-run carrier Air India.

Hurt by competition from other airlines, Air India is having a debt of more than Rs 52,000 crore, with about Rs 28,000 crore in working capital debt and about Rs 4,000 crore in interest burden alone.

Besides selling Air India, the government also seeks to sell Air India Express and AI-SATS which is an airport services company.