Air India privatisation - set to derail
Our Corporate Bureau
03 September 2001
In a significant development that is likely to be seen as a setback to the entire privatisation effort of the Indian government, Singapore Airlines, the world's most profitable airline and a leading contender (in partnership with the Tata Group) for the bid to acquire Air India, announced its withdrawal from the race.
With Air France and Delta Airlines announcing their withdrawal early on and the Hinduja group banned from participating in the Air India privatisation, the Singapore Airlines' announcement leaves only the Tata Group in the fray.
The airline has cited an adverse climate brought about by opposition to the privatisation programme of the country's international airline, Air India, from various quarters including political groups, trade unions and the media as a prime reason for withdrawing its bid. It also stated that the downturn in the global aviation industry and its need to increase its stake in its Australian operations, as other reasons.
India's minister for disinvestment, Arun Shourie, has accepted that fact that this withdrawal was a setback for the country's privatisation programme which planned to raise nearly Rs 12,000 crore (approx. US $2.5 billion) for the government this fiscal.
As if to send a signal to the world at large, the prime minister effected a cabinet reshuffle, that seemed to coincide with the Singapore Airline withdrawal. He promoted Mr. Shourie to the rank of cabinet minister and made significant changes in the aviation and telecommunications ministries by bringing in people who are more reform-oriented. The civil aviation ministry is now headed by Syed Shahnawaz Hussain, who replaces Sharad Yadav and the telecommunications ministry has been given to Pramod Mahajan, who will oversee the same in addition to his existing portfolios of information technology and parliamentary affairs. As a result, Ram Vilas Paswan has lost the telecom ministry.
A spokesman for Tata said the company was looking for another foreign airline to be its partner in the bid.
