IndiGo does not want govt in any AI deal
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Saurabh Sinha
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New Delhi:
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`Don't Sell Assets Abroad To State-Owned Airlines'
Low-cost carrier (LCC)
IndiGo does not want the government as a partner if its attempt to
acquire the international operations of Air India and AI Express works
out. The airline also said it will start low-cost long-haul overseas
flights “with or without“ the AI deal working out. It has cautioned that
selling AI's assets like slots at airports abroad to a state-owned
foreign airline could be a “Shakespearean tragedy“, akin to
“outsourcing“.
“We would look at acquiring all of AI's international
operations and AI Express,“ IndiGo's reticent founder-promoter Rahul
Bhatia said on Thursday.His partner, Rakesh Gangwal, said, “A joint
venture or joint ownership with the government is at best a very , very
difficult proposition .... government has owned and managed AI for more
than 50 years. They are looking to divest in it ...From our perspective
as a corporate entity , we would not go down a path where there would be
a JV or even a minority , majority stake which the government would
own. Maybe (it's) a good model, but we cannot bring value to that
proposition.“
IndiGo had last Wednesday sent a formal expression of interest for international operations of AI and AI Express after the government had approved divesting its stake in AI. If acquisitions of only inter national operations are not possible, IndiGo had offered to acquire all operations of AI and AI Express.
Explaining this move, the two founder-promoters said India is a huge market for international travel but its hubs for globetrotting are abroad. With over 40% domestic market share, IndiGo felt it should enter the long-haul market “irrespective of how the AI story plays out“. “Our original plan was to share our thinking at the end of this month. However, that got pre-empted due to the government's in principle decision to divest itself of Air India,“ Gangwal said. “We believe international long-haul markets are ready for right type of low cost operations,“ Gangwal said.
According to Rahul Bhatia, carving out of an airline operations for sale is not a new concept. “A few decades ago, United Airlines acquired Panam's Pacific operations. Based on the success of that transaction, United then followed up by acquiring Pan Am's London routes in 1990.“
IndiGo had last Wednesday sent a formal expression of interest for international operations of AI and AI Express after the government had approved divesting its stake in AI. If acquisitions of only inter national operations are not possible, IndiGo had offered to acquire all operations of AI and AI Express.
Explaining this move, the two founder-promoters said India is a huge market for international travel but its hubs for globetrotting are abroad. With over 40% domestic market share, IndiGo felt it should enter the long-haul market “irrespective of how the AI story plays out“. “Our original plan was to share our thinking at the end of this month. However, that got pre-empted due to the government's in principle decision to divest itself of Air India,“ Gangwal said. “We believe international long-haul markets are ready for right type of low cost operations,“ Gangwal said.
According to Rahul Bhatia, carving out of an airline operations for sale is not a new concept. “A few decades ago, United Airlines acquired Panam's Pacific operations. Based on the success of that transaction, United then followed up by acquiring Pan Am's London routes in 1990.“
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