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-   -   Air India Divestment - Tata Sons completes acquisition (https://www.team-bhp.com/forum/commercial-vehicles/197321-air-india-divestment-tata-sons-completes-acquisition-6.html)

It is good news that Tata is interested in Air India.

Vistara Chairman Bhaskar Bhatt says Tata's serious about Air India if Govt willing to do a no strings attached deal


https://m.economictimes.com/industry...rom%20%251%24s

Not sure about specifics but Subramanian Swamy threatens to go to court if Air India is sold. Could you please throw some light on the legal aspects? Does this sale require approval from any specific parliamentary committee?

Some journalist had tweeted that Tata's have appointed Deloitte to do the due diligence & they're also consulting a law firm. That tweet has since been deleted!

I don't know what he can do to stop this sale from going through. Personal opinions cannot stop a govt from implementing its stated policy of disinvestment. It all depends on what grounds he makes to oppose the sale. Some valid points that i can think of are facts like pending litigation against AI who's outcome can affect the sale, International arbitration proceedings which could complicate the sale etc. In short, a sale without a " no encumbrances" certificate.

Parliament has already cleared its sale so there won't be much problem from GOI front. True, he can cause a lot of legal irritation but there are equally smart people in the govt's arsenal to counter his arguments in court too.

I don't know why he behaves this way. Maybe he believes the ~₹ 55,000 crores spent already on funding Air India's losses is best use of tax payers money. Air India is governed by an act of Parliament - the Air Corporations Act. The sale will be approved in Parliament through an amendment of that act. So the chances of successfully moving a Court to question an amendment to an Act of Parliament seems remote. The sale in case of Air India or LIC (another business organization created by an Act of Parliament) will need approval of Parliament and not just a committee. That's my understanding. Lawyers on the forum could shed better light.

AI / IC was run aground by decades of bureaucratic mismanagement, some of which I have tried to list:

• Govt appointed chairman (bureaucrat) who are from varied backgrounds and have little knowledge of how to run an airline.
  
• Pre merger, AI was a slightly loss making venture, while IC was a mixed bag of being in black and red. The merger made the entity a big loss making enterprise (superfluous staff, dissimilar aircraft to name a few).
  
• Why did AI order several wide body Boeing aircraft and IC ordered several narrow body Airbus aircraft, when the merger discussions were in place, before evaluating their fleet for the future optimized merged entity? Many of these aircraft sat on the ground for months, brand new, due to lack of crew and routes.
  
• Why was significant amount of money spent on re-branding IC as 'Indian', even when the merger discussion was in progress?
  
• Why didn't successive govts clear their dues with IC / AI for VIP usage?
  
• AI / IC (more IC than AI) was forced to fly loss making routes for public service as national flag carrier. The losses got accumulated over time.
  
• AI / IC was forced to stop flying profit making routes to make private airlines profitable (case in point - the CCU-RGN-SIN flight of IC always went full - it was arbitrarily stopped and till now only private airlines fly the route between CCU-SIN)

I know these and a lot more, courtesy my dad who is a retired IC (later AI) ground staff.
Sale of the current AI to a competent new owner who can restructure the staff (which is already down to manageable levels as there has been little to no hiring in the past few years), streamline the fleet and optimally use the routes looks like the only solution now. Unions should be able to retain some / all benefits in a sane discussion.

Subramanian Swamy is a wildcard. He behaves randomly sometimes, his present stand on AI divestment being a case in point. Which is why I personally feel its a good thing that he wasn't made the FM (I've seen some people wonder why Swamy wasn't made the FM)

Less said the better. In this age of specialization and deep domain knowledge the IAS have spun a myth about how as 'generalists' they can do a better job of running a PSU than a domain expert business leader. They do this to retain their clutches on power. In no private sector will you believe that a person could be so accomplished to be the Chairman of Hindustan Unilever one day and then the Chairman of Tata Power and then the boss of Infosys. But the IAS perpetuate this myth at the expense of the nation as well as competent leaders within the PSUs who know the territory. And then these worthies revolve in and out every 2 or 3 years! Sorry for the rant.
The merger was the wrong move. It was pointed out by the leadership of both airlines and the wiser sections of the bureaucracy. Why was it pushed through by the then civil aviation minister befuddles me. Without doubt for political reasons. That is a euphemism for you know what.
I believe there was a lot of mis-use of political power to 'sell' Air India's prime routes to politically accommodating foreign airlines.

One question never answered was the need for Air India to have a large regional office in Amsterdam despite the fact it never flew to Schipol during the late 90's

Hey, how would not want to be based out of Amsterdam for a while! :)

But seriously, there are quite a few international companies who have their headquarters in Amsterdam even though they might not even operate or have any business in the Netherlands (E.g. Telecom operator Vimpelcom/Veon)

Also, the Netherlands offers financially attractive (fiscal) arrangements for companies to consolidate some/all of their worldly operations.

Jeroen
Born, raised, studied in Amsterdam

I truly agree but AI never tried those tax efficient schemes.

First class question. Oh the joys of how a PSU works :-) AI used to send its aircrafts to Jordan for heavy maintenance checks while its facilities in Mumbai, Delhi and Nagpur ran at well below capacity and had all the tooling and certifications for those checks. You may ask why Jordan of all the places. Read between the lines. In addition to that about a dozen engineers would go along for the two week trip to ostensibly inspect and monitor. As a comparison when I had aircraft from a private airline (Indian or foreign) under maintenance usually one engineer would accompany the machine to serve as a liasion point.

Sir why do you bash IAS/ Civil Services so much in your posts?
I feel you have been barking on the wrong bush Sir. You always blame Civil services for mess but give a long rope to political class and crony corporates who are the real culprits.

Government role is to facilitate business not run business
Air India is a classic case of what Government shouldn't do.

P.S I have lost trust in so called professionals and corporates after seeing so much scams from ILFS to present Yes Bank.

The Civil services is outdated, and too much power concentrated with them. They are the ones who should at least implement the government's vision, but they are continuing in the direction that has been built up over time.

Add to that the vested interests which have done what should not have been done - in this specific case, AI-IA merger and giving away key routes to private players. Regarding Yes bank. the bad loans were given long back and these are haunting the bank now.