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TATA TAKING NEW LOOK AT
AIR INDIA PRIVATISATION
Indian conglomerate Tata Group is looking to acquire all or
part of state carrier Air India with Tata Group chairman N.
Chandrasekaran saying it might consider an acquisition but
said the group cannot run two airlines with just 15-20 aircraft.
Tata currently has a 49 percent stake in AirAsia India and a 51
percent stake in Air Vistara that it owns with Singapore Air-
lines. AirAsia and Air Vistara together have a domestic market
share of only 6.8 percent with a fleet of 29 aircraft. Go Air, with
a similar number of planes, has a market share of 8.3 percent.
Air India could be a good fit depending upon how much Tata
is willing to pay. It would give Tata a jump-start in the inter-
national arena as Air India has 18 slots in important airports
such as London, Paris and New York. Moreover, over 119 aircraft
would be added in one go.
Tata faces some challenges in any bid however as India’s
government policy means no foreign airlines can bid for Air
India and its partnership with Singapore Airlines falls into that
category. India is said to be reviewing that policy in light of
the lukewarm response so far to its plans to sell off the carrier.
The Indian arm of the CAPA Centre for Aviation weighed in
recently on the issue of Air India and outlined several critical
issues the government and any buyer must address for a suc-
cessful sale. First and foremost, CAPA said, Air India’s balance
sheet must be cleaned up because the airline’s current “mas-
sive” debt load is unsustainable. “ The core divestment should
consist of the airline operations only, namely Air India, Air India
Express and optionally Air India Regional. They should be sold
along with aircraft-related debt and reasonable working capital
loans,” CAPA India said.
CAPA India also said the airline’s special units that handle
MRO (Air India Engineering), catering (Chefair), ground han-
dling (both Air India Air Transport Services and AISATS) and
Centaur Hotels, should be sold separately to raise capital that
can pay off debt. Other “non-core assets” like property hold-
ings should be placed in a “special purpose vehicle”.
The government should also sell off 100 percent of the airline
and get completely clear of any holding, CAPA suggested,
to eliminate any fear of future government interference, and
global carriers should be allowed to invest up to 49 percent in
THAILAND GETS CLEAR OF ICAO RED FLAG
The International Civil Aviation Organisation has removed its “red flag”
hanging over Thailand’s aviation industry due to earlier safety concerns,
officials with the Civil Aviation Authority of Thailand (CAAT) announced.
Thailand was downgraded in June 2015 after missing a deadline to resolve
significant safety issues and that kept Thai airlines from adding routes, but
allowed them to continue operating their current schedules at the time. The
Thai aviation authority said the ICAO had made the decision after a meeting
on 6 October. “Although lifting the red flag is a significant turning point for her
aviation industry, Thailand as well as CAAT need to carry on their missions to
improve the aviation safety standards,” the CAAT said on its website.
EASA OPENS OFFICE IN SINGAPORE
The European Aviation Safety Agency (EASA) has officially opened a
regional office in Singapore designed to strengthen the well-established
partnership between the Civil Aviation Authority of Singapore (CAAS) and
EASA, and will support the aviation industry from Singapore and Europe.
The regional office will also handle affairs for the Southeast Asia region.
Singapore and Southeast Asia have become key actors on the global
aviation scene and key partners for Europe. In particular, the European
aviation industry has significant manufacturing, training, maintenance,
repair and overhaul activities and needs support from the authorities in
order to facilitate its business opportunities. Singapore is the fourth EASA
regional office after Washington, Montreal and Beijing. The office will
comprise two permanent staff members.
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