Air India sale: Tata Sons requests speedy regulatory process
Tatas needed assurance that aircraft would not be stranded and would be allowed to operate while the requisite clearances from DGCA were secured.
Tata Sons, which won the bid to buy Air India, has requested that the regulatory process for consolidating its airlines be accelerated, the Business Standard has reported. Tatas needed assurance that aircraft would not be stranded and would be allowed to operate while the requisite clearances from lessors and the Directorate General of Civil Aviation (DGCA) for the merger were secured, the report quoted people with direct knowledge of the matter.
The government has stated that clearances will be expedited. Approvals will be granted by the DGCA by executive order so that the aircraft will not be grounded until the requisite approvals are obtained, the report quoted a government official as saying.
Vistara and AirAsia India are two of the Tata group’s airlines. It will now acquire two more brands, Air India and its subsidiary Air India Express, as a result of the recent purchase.
The Aircraft Rules, 1937, which govern civil aviation in India, state that when the ownership of a registered aircraft changes, the new owner must notify the DGCA. It is forbidden for anyone to fly or assist in flying until such an application is made and the certificate of registration is granted to the new owner.
The Tatas will have to integrate one of their airlines’ air operator permits (AOP) with Air India’s in order to consolidate.
Tata Sons and Air India
Because the Airbus A320 neo aircraft are on sale and leaseback, the group will need to get consent from lessors before filing to the DGCA. Because the aircraft’s title deed is being transferred from government ownership to the Tata group, clearance from aircraft lessors is required.
Tata Sons are prohibited from transferring its shares directly or indirectly to any individual for one year after the transaction closes, according to the Air India share purchase agreement.
However, a merger is permitted if the new owner owns more than 51% of the carrier during the one-year lock-in period. According to sources, once the Tatas purchased 100% of AirAsia India, the process of consolidating the Tata group’s airlines will begin early next year.
In 2020, the Tatas expanded their holding in AirAsia India from 51 percent to 83.67 percent, paying Rs 276.29 crore to AirAsia Berhad for a 32.67 percent interest. The company also has a call option on its partner’s remaining 16.33 percent interest in the airline. The remaining ownership in AirAsia Berhad is valued at $18.8 million.