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India extends ban on scheduled international flights till November 30

NEW DELHI, Oct 29: Amid ongoing coronavirus pandemic, Director General of Civil Aviation (DGCA) on Friday extended the suspension on scheduled international passenger flights till 30 November.

However, the restriction shall not apply to international all-cargo operations and flights specifically approved by DGCA, a circular added.

Also, international scheduled flights may be allowed on selected routes by the competent authority on case to case basis, the Indian regulatory body said.

"In partial modification of circular dated 26-06-2020, the competent authority has further extended the validity of circular issued on the subject cited above regarding Scheduled International commercial passenger services to/from India till 2359 hrs IST of 31st October, 2021. This restriction shall not apply to international all-cargo operations and flights specifically approved by DGCA," the notice read.

India has formed air-bubble pacts with around 28 countries, including the US, the UK, the UAE, Kenya, Bhutan and France. Under an air-bubble pact between two countries, special international flights can be operated by their airlines between their territories with specific restrictions.

Recently, a report suggested that the Indian government is unlikely to lift the restrictions on international flights immediately.

Scheduled international passenger flights to and from India remain suspended since March last year amid the coronavirus pandemic. Currently, the suspension on scheduled international flights is till October 31 and the government is most likely to extend the date, it had added.

Civil Aviation Secretary Rajiv Bansal said that the current frequencies available under the air bubble arrangements are adequate to meet the demand and there is not much demand for international routes as the visa regime is very restrictive.

He also noted that on certain sectors such as US and Canada, airlines have 30 to 40% load factors for mid-December 2021. "We can surely consider opening once demand nears pre-Covid levels."

Speaking on the sidelines after the inauguration of the Kushinagar international airport in Uttar Pradesh on Wednesday, Bansal also said that if there is a need, then air bubble arrangements can be expanded.

To a query on when fare bands are likely to be removed, Bansal said a call would be taken "once demand returns to pre-Covid levels".

On the domestic front, Domestic air passenger traffic saw a 5.45% growth last month with the easing of lockdown curbs following the decline in Covid cases that gave confidence to more people to travel by air.

Around 7.07 million passengers took to the skies in September, compared to 6.7 million in August, according to data from the DGCA.

Govt signs share purchase agreement with Tata Sons for Rs 18,000-crore Air India sale

NEW DELHI, Oct 25: The government on Monday signed the share purchase agreement with Tata Sons for the sale of national carrier Air India for Rs 18,000 crore.

Earlier this month, the government had accepted an offer by Talace Pvt Ltd, a unit of the holding company of the salt-to-software conglomerate, to pay Rs 2,700 crore cash and take over Rs 15,300 crore of the airline’s debt.

Following that, on October 11 a Letter of Intenet (LoI) was issued to the Tata Group confirming the government’s willingness to sell its 100 per cent stake in the airline.

"Share Purchase Agreement signed today by Government with Tata Sons for strategic disinvestment of Air India,” Department of Investment and Public Asset Management (DIPAM) Secretary Tuhin Kanta Pandey tweeted.

Air India Director – Finance Vinod Hejmadi, Civil Aviation Ministry Joint Secretary Satyendra Mishra and Supraprakash Mukhopadhyay from the Tata Group signed the share purchase agreement (SPA).

Now, various regulatory clearances, including from the Competition Commission of India (CCI), would have to be taken by Tata Sons before the actual handover of the airline takes place by December-end.

The government is divesting its 100 per cent ownership of Air India and Air India Express along with its 50 per cent stake in ground-handling company AISATS.

Tatas beat the Rs 15,100-crore offer by a consortium led by SpiceJet promoter Ajay Singh and the reserve price of Rs 12,906 crore set by the government for the sale of the loss-making carrier.

As on August 31, Air India had a total debt of Rs 61,562 crore.

As part of the deal, 75 per cent of this debt or Rs 46,262 crore will be transferred to a special purpose vehicle AIAHL before handing over the loss-making airline to the Tata Group.

Tatas would not get to retain non-core assets such as the Vasant Vihar housing colony of Air India, Air India Building at Nariman Point, Mumbai, and Air India Building in New Delhi.

Of the 141 Air India aircraft that Tatas would get, 42 are leased planes while the remaining 99 are owned.

Tatas will also take over the capitalised lease liability on account of operating leases of Rs 9,185 crore. Besides, some of these 141 planes are grounded due to maintenance issues.

Also, there is an obsolescence factor as many of these aircraft are not fuel efficient.

The government will, however, transfer about Rs 16,000 crore of unpaid current liabilities, in excess of current and non-current assets, such as fuel bills and other pending dues that Air India owes to suppliers, to Air India Assets Holding Ltd (AIAHL).

While this will be the first privatisation since 2003-04, Air India will be the third airline brand in the Tatas’ stable — it holds a majority interest in AirAsia India and Vistara, a joint venture with Singapore Airlines Ltd.

Air India will give it access to a fleet of 117 wide-body and narrow-body aircraft and Air India Express Ltd another 24 narrow-body aircraft, besides control of 4,400 domestic and 1,800 international landing and parking slots at domestic airports, as well as 900 slots at airports overseas such as London’s Heathrow.

Air India started suffering losses every year since its merger with Indian Airlines in 2007-08. A Turnaround Plan (TAP) as well as a Financial Restructuring Plan (FRP) were approved for Air India by the previous UPA regime in 2012.

However, the TAP did not work out and Air India continued to reel under losses, with the government giving Rs 20 crore/day to keep the airline afloat.

Over the last decade, more than Rs 1.10 lakh crore was infused by way of cash support and loan guarantee in the loss-making airline to keep it afloat.

"Right now Air India is having losses of Rs 20 crore/day. So those loses after handover will not come to the taxpayers. The question is that when you have an excessive debt and your equity value is deeply negative at (-)Rs 32,000 crore…"

"So unless and until you reconstruct the balance sheet, the only option would have been to actually close down the company. Because there was no other option to run this kind of a company,” Pandey had earlier said.

Tata wins Air India bid, ending 68 years of government control

NEW DELHI, Oct 8: Tata Sons is set to acquire debt-laden Air India with a winning bid of Rs 18,000 crore, the government said here on Friday, a homecoming moment for an airline it founded but gave control to the state.

An empowered panel of ministers led by home minister Amit Shah gave its approval to the salt-to-software conglomerate’s offer over that of SpiceJet chairman Ajay Singh, the only other bidder in the fray. Singh bid in his personal capacity and his bid was around Rs 15,100 crore.

"M/S Palace Pvt Ltd, a wholly owned subsidiary of Tata Sons, had the winning bid," said Tuhin Kanta Pandey, Secretary of Department of Investment and Public Asset Management (DIPAM), at a media briefing.

The reserve price for Air India, below which the government would not have accepted offers, was fixed at Rs 12,906 crore. Pandey said that the deal will be closed by December 2021.

Pandey said that total debt of Air India as on August 31 was Rs 61,560 crore. Debt which will be taken over by Tata will be Rs 15,300 crore while Rs 46,262 crore will remain with Air India Asset Holdings Ltd, which is a special purpose vehicle created to retain the non-core assets, land and the debt of Air India which Tata will not be taking on.

This means that the cash consideration of the deal will only be Rs 2,700 crore.

As part of the sale purchase agreement to buy Air India, the Tata Group will retain all of Air India's around 12,000 employees for a period of atleast one year. Following one year the Tata Group will have the option to offer the employees of Air India a voluntary retirement scheme, the details of which have not been fixed with the government as part of the current share purchase agreement.

"While admittedly it will take considerable effort to rebuild Air India, it will hopefully provide a very strong market opportunity for the Tata Group's presence in the aviation sector," said Tata Group Chairman Emeritus Ratan Tata in a separate statement.

As per the contours of the deal, which should be completed by December-end, Tata cannot sell the logo and brand name of Air India for five years. Even after that, it can't sell these assets to a foreign entity.

Selling Air India, which has not made profits in 15 years, was a vital piece in the government’s ambition to privatise assets. Finding a buyer was tough because the airline— nicknamed Maharaja—has long struggled to stay aloft, was steeped in losses and bruised by competition.

Friday’s announcement actually marks the culmination of several attempts to find a buyer for the airline founded in 1932. It is good riddance for the government because it no longer has to throw good money at a bad asset it took over from the Tatas 68 years ago.

For the Tatas, despite the baggage of a bloated workforce and debt, Air India offers some prized aviation assets. The Tatas get access to slots at busy foreign airports, lucrative destinations such as the Gulf thanks to bilateral flying rights between India and foreign nations, membership to the Star Alliance global network, a solid mix of narrow body and wide-body planes and a trained workforce.

All these give Tata Sons formidable air power because of the majority stakes it owns in budget airline AirAsia India and full-service carrier Vistara. In one stroke, the Tatas get access to aviation assets which otherwise would have taken years and boatloads of money for Vistara to build.

The deal also packages Air India’s profitable low-cost arm Air India Express and 50 percent of AISATS, which offers cargo and ground handling services at major Indian airports, to the Tatas.

Tata Sons will get control of Air India's 4,400 domestic and 1,800 international landing and parking slots at domestic airports, as well as 900 slots at overseas airports, a report said earlier.

As part of its latest bid to sell Air India, the government changed the norms in October 2020 and called bids based on enterprise value. According to the new plan, the successful bidder didn’t have to absorb any predetermined debt. Air India has a net debt of around Rs 60,000 crore.

The nod came after the Air India-Specific Alternative Mechanism, the name by which the empowered group of ministers which includes Shah, Finance Minister Nirmala Sitharaman and Commerce Minister Piyush Goyal is known, accepted Tata Sons bid. The decision was then cleared by the Union Cabinet.

The Tatas and Air India go a long way back. It was JRD Tata who founded the airline with a capital of Rs 2 lakh given by a reluctant Sir Dorabji Tata, the then chairman of Tata Sons. JRD piloted the first flight in 1932 and the Indian aviation industry took off.

In 1946, the aviation division of Tata Sons was listed as Air India and, in 1948, the Air India International was launched with flights to Europe.

The international service was among the first public-private partnerships in India, with the government holding 49 percent stake, the Tatas 25 percent and the public owning the rest.

In 1953, Air India was nationalised. The Air Corporation Act created two airlines—Air India International and Indian Airlines Corporation (IAC), the forerunner of Indian Airlines.

Air India put India on the global map. The king and queen of Sweden flew the Maharaja as did Pope Paul VI when he travelled to India in 1964. Singapore and Malaysia sought the advice of Air India management when setting up their state airlines in the 1970s.

Both Air India and Indian Airlines had a good run until the late 1980s. Matters came to a head following the merger of the two into Air India in 2007.

In the first year following the merger, the new entity posted a loss of Rs 2,226 crore. Losses continued to mount as Indian skies opened up and competition got fierce. Even hefty bailout packages failed to resurrect the airline, leaving the government with no option but to privatise the flag carrier.​



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