Economics to decide market value of Air India
30 November 2017
Reports quoting unidentified sources, said while its debt burden is a drag on the sale of assets of Air India, the airline has a 14 per cent share in domestic air travel and 17-18 per cent market share in the international traffic, which makes it an attractive target.
The market will finally prod other airlines also to look for Air India stake as a 14-per cent share of domestic air travel and an 18 per cent share in international air traffic would make Air India an attractive target despite its debt burden.
So far, private sector aviation majors Jet Airways and SpiceJet have joined the race alongside IndiGo and the Tata Group to acquire Air India (See: Jet Air, SpiceJet may join race to acquire segments of Air India).
So far, Tata Group, IndiGo and Bird Group have expressed interest in buying Air India, even as the government is keen to offload stake in the loss making air carrier.
The now-bankrupt Maharaja's disinvestment has reportedly entered the slow lane with no likelihood of completion of its stake sale by early 2018.
Ultimately, the market will decide the divestment proceeds of Air India based on its extensive traffic and international slots. Airlines looking to expand overseas would be keen to bid for it.
Air India had a market share of 35 per cent in the domestic market a decade ago, which has now fallen to 14 per cent, placing it third in the national ranking, behind Indigo, which commands about 40 per cent of Indian skies, and Jet Airways, which has about 16 per cent of the market.
Air India also commands 17 per cent of the international traffic from and to India. Air India, which has accumulated losses and debt to the tune of thousands of crores of rupees, has received bailout packages worth about Rs24,000 crore out of a total Rs30,000 crore approved but has failed to revive its fortunes amid private airlines continuously gaining market share.