Sea Change In The Skies

When the Tata-Singapore Airline controversy was at its peak, the then civil aviation minister Ananth Kumar had reportedly passed the buck to the Prime Minister's Office (PMO), saying there were serious objections to the proposal from the highest quarters. Many agreed that Kumar's move was primarily to avoid flak from quarters which had felt that the Tatas' venturing into the airlines business could have been the best news for the troubled domestic aviation sector. A few years later, however, disinvestment secretary Pradip Baijal is confident that the government's disinvestment process for both Indian Airlines and Air-India will not lead to tensions among the competing bidders.

"A whole lot of companies have shown interest and it will increase once we freeze the shareholder agreement and formulate the business plan," says Baijal. "The onus is on us to ensure transparency of the highest order," he adds. Baijal, who has refused to name companies interested in the bids, says his ministry will soon present a comprehensive disinvestment plan to the cabinet committee that will elaborate the government's strategy for the next five years. "There will be no more major announcements but we will tell the committee how we plan to handle the process and explain (in the event of likely criticisms) that such moves are taking place across the world as well," says Baijal.

Bureaucrats in the ministry of civil aviation agree. They admit that there has been tremendous interest in the ministry corridors ever since Ratan Tata was quoted by a financial daily as saying that his group was interested in the airline business and that it was contemplating going alone for Indian Airlines and tying up with a global airline to participate in Air-India's selloff. Where does the Tata gameplan fit in the entire airline business? The group, which wrote the first chapter in India's civil aviation history in 1932 with its Tata Airlines (which was later handed over to the government and renamed Air-India), would have been an ideal competitor to Indian Airlines, Jet Airways and Sahara Airlines. And despite two previous setbacks, the group remains extremely serious about the aviation business. "What happened in the past is history now. But if the same thing happens this time, the Centre will send extremely wrong signals to potential investors. The process needs to be very, very transparent," says a senior bureaucrat in the civil aviation ministry.

The official, speaking on conditions of anonymity, adds that the Tatas have already formed a core panel to work on airline projects and even agreed on a soft deal with Singapore Airlines for their Air-India bid. "Cash-rich Singapore Airlines has been interested in picking up stakes in global airlines to increase more hubs for global operations," the official says, citing the example of Dubai-based Emirates Air picking up a controlling stake in Air Lanka and offering lucrative rates across Europe. "Currently, Air-India may not have too many lucrative routes but with active partnership with a foreign airline, things can change," the official adds.

That's Air-India. On the profitable Indian Airlines, the consensus among a significant section of the bureaucracy (read the civil aviation ministry and the PMO) is in favour of the Tatas, ostensibly because this time round Bombay House appears extremely strong in its lobbying tactics as well and is way ahead of rivals like Jet and Sahara.

Also, a section of the government has impressed upon the PMO about the significance of a company serious in aviation picking up the tab, both for Indian Airlines as well as Air-India. "In a meeting last month at the ministry, the issue of someone monopolising the game (in the event of a rival airline picking up stake) was also discussed. So was the matter of the source of funds, that is, from where companies bidding are getting their funds," says a senior ministry source, citing the example of an official who talked for an hour on how the airline business was more about passion and that companies focused on the sector should be encouraged. "He cited the example of Ratan Tata personally flying his group's newly-acquired Falcon 900 from Paris," adds the ministry source. Yes, the passion of flying has never been lacking in the Tata group.