IndiGo, the only airline to publicly show interest in buying parts of Air India Ltd., dropped out of the race for the state asset, dealing a setback to Prime Minister Narendra Modi’s most high-profile privatization plan.
The biggest airline in India, operated by InterGlobe Aviation Ltd. said it doesn’t have the capability to purchase and turn around the operations of Air India in its entirety after the government ruled out selling it piecemeal. The budget carrier was keen on acquiring the international operations of Air India.
“We do not believe that we have the capability to take on the task of acquiring and successfully turning around all of Air India’s airline operations,” IndiGo President Aditya Ghosh said in a statement sent by text message late Thursday.
The nation’s biggest budget carrier was counting on Air India’s international operation, which has lucrative landing and parking slots at airports from Heathrow to New York, to expand and become a low-cost, long-haul airline in a relatively shorter time. However, India said last week it will sell a 76 percent stake in Air India as a whole, and the buyer would have to take on about two-thirds of its $7.8 billion debt.
IndiGo has said it will pursue its ambitions with or without Air India. Billionaire owners Rahul Bhatia and Rakesh Gangwal had said earlier that they won’t buy Air India if that involves a partnership with the government. The state airline has been unprofitable since its 2007 merger with domestic operator Indian Airlines Ltd.
Singapore Airlines Ltd. and India’s Tata Group, which run a joint venture called Vistara, have said they are open to a deal for Air India but haven’t elaborated. Air India, which is known for its Maharajah brand icon, traces its roots to Tata Airlines, founded in the 1930s by the then-patriarch of Tata Group, J.R.D. Tata.
