Delhi to sell Air India groundhandler Alliance Air

India’s central government will attempt to privatise the groundhandling arm of Air India (AI, Mumbai Int’l) that remains in state hands during the coming financial year (starting April 1), starting the process by issuing an expression of interest (EOI), an unnamed official has told the Press Trust of India news agency. It has also received the green light to sell domestic carrier Alliance Air (India) (9I, Mumbai Int’l).

“We already have Cabinet approval for selling the subsidiaries of Air India. So we will come out with an EOI inviting bids for one of the groundhandling arms in the next fiscal,” the official said without specifically naming the company.

Four former Air India subsidiaries are currently positioned under Air India Assets Holding Ltd, a special purpose vehicle (SPV) established in 2019 to hold the flag carrier’s non-core assets and most of its debt. These are the groundhandling firm Air India Air Transport Services Ltd; Airline Allied Services Ltd dba Alliance Air; MRO unit Air India Engineering Services Ltd; and the Hotel Corporation of India Ltd.

When Indian conglomerate Tata Sons took 100% control of loss-making Air India towards the end of January, it also took on 100% of the equity of low-cost subsidiary Air India Express (IX, Mumbai Int’l) and 50% of groundhandler Air India SATS. Singapore-based groundhandling and inflight catering provider SATS Ltd owns the other 50% of the latter.

Like Air India Air Transport Services, Alliance Air was not part of that deal. The government has reportedly said that it intends to sell Alliance Air and use the proceeds to pay off some of the debt now held in the SPV.

Alliance Air and the other three former subsidiaries are expected to fetch around INR20 billion rupees (USD265 million) and the sale of buildings and other assets an additional INR147 billion (USD1.95 billion), the Economic Times reported in October 2021 quoting government sources.