India's biggest airline, IndiGo, has expressed unsolicited interest in buying a stake in state-owned Air India, the junior aviation minister said on Thursday, a day after the Cabinet approved plans to privatize the carrier. Several other airlines, domestic and international, have also expressed an interest in buying part of Air India, Jayant Sinha told reporters. He did not name any of the other airlines. "They (IndiGo) have expressed an interest in the strategic divestment process," he said. "The process has just begun ... it's a very introductory interest." A spokesman for IndiGo, which flies four of every ten Indian domestic passengers and is owned by InterGlobe Aviation , declined to comment. The airline, launched in 2006, has expanded rapidly in India's booming aviation market, with a focus on running a single fleet of aircraft and prioritizing domestic routes — unlike Air India. Shares in InterGlobe closed down 2.2 percent in a firmer Mumbai market. The government's decision on Wednesday to give "in-principle" approval to sell Air India has kick-started a process that could see the government offload an airline struggling to turn a profit in the face of growing competition from low-cost rivals and its huge debts. Air India, once the country's biggest airline, has seen its domestic market share shrivel to 13 percent as private rivals such as IndiGo and SpiceJet have expanded. However, its sought-after landing slots on international routes, its domestic passenger base and the possibility of the government writing off part or all of the company's 520 billion rupees ($8 billion) in debt could make it an attractive proposition. Indian media have reported that the Tata conglomerate, which runs two airlines in partnership with Singapore Airlines and Malaysia's AirAsia, is also interested in acquiring part of Air India. Tata, which tried to buy the airline in a failed privatization process a decade and half ago, has declined to comment. Any actual sale of Air India is some time away. India will now form a committee to decide on the details, Finance Minister Arun Jaitley said on Wednesday, including the size of the stake to be sold. Previous attempts to sell the state-owned airline have floundered, in part due to a lack of potential buyers and union opposition. New Delhi is hoping to privatize Air India to make the ailing national carrier more competitive, but experts say debts of at least $8 billion could deter buyers. India has the world's fastest-growing passenger airline industry, expanding at an annual rate of around 20 percent and the sector holds vast untapped potential. But its loss-making state airline is plagued by a reputation for delays, cancelations and poor service. Efforts to privatize the airline — a huge drain on state coffers — have foundered in the past and experts said the government would have no choice but to write off the debt if it was to attract a buyer. "Who's going to take the risk of buying a loss-making airline and with a mountain of debt?" said Dhiraj Mathur, a partner with the consultancy PwC specializing in aviation. Others said the current right-wing administration, India's first one-party government in 30 years which touts itself as business-friendly, was well-placed to achieve a sale. "To write off $9 billion of taxpayers' money is not easy, but if anyone can do it, it's this government," said Kapil Kaul, South Asia chief executive of the Centre for Aviation, a consultancy. "When Air India gets sold, it signals to the global investor that the new India is real and possible." The other major obstacle is the unions representing Air India's staff, which have fiercely opposed a sale. But a tweet from Anand Mahindra, the Indian billionaire who heads the Mahindra Group conglomerate, underscored the challenges facing the government in finding a buyer. "I see myself as a generally courageous person. But I confess .. I don't possess THAT much courage," he tweeted. The airline -- known as the "Maharaja of the Skies" for its turbaned mascot — may not be winning in the reputation stakes. But Amber Dubey, partner and India head of aerospace and defense at global consultancy KPMG, said its large fleet and significant market share could make it an attractive proposition — if the debt was written off. "It's a one-time deal wherein the winner takes all and others may take years to catch up," he said. Air India has its roots in the private sector. It was set up by Tata Sons in 1932 and acquired by the Indian government in 1953. Its problems can be blamed on a combination of poor decisions, a lack of a consistent leadership and political interference — including frequent demands from politicians for new routes to their constituencies. "This is a tough call for the government, but if it can do a once-for-all clean-up and not look back, it can expect significant interest in the airline," Kaul said. — Agencies
