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SIA opts out of A-I race due to 'opposition to privatisation'

In a major blow to privatisation of Air-India, Singapore Airlines on Saturday withdrew its bid for the airline due to 'adverse climate and opposition to privatisation' even though its joint partner Tatas said that they would reassess the situation with 'open mind'.

SIA's withdrawal, within hours of Hindujas opting out of the race, leaves only Tatas as the sole bidder for the stake in Air-India where government has offered to sell 40 per cent stake to a strategic partner with management control.

Tata chief Ratan Tata, who had asserted on Friday night that Tata-SIA consortium was in the race for the airline, wrote to Divestment Minister Arun Shourie on Saturday morning saying that his group would review the situation in the light of withdrawal of SIA from the consortium and 'revert'.

SIA general manager (India), Andrew Wong, earlier met divestment secretary Pradeep Baijal to hand over a communication written by the foreign airline to Ratan Tata about its decision.

When contacted, Baijal said that it was unfortunate and sad that foreign airlines were withdrawing from the privatisation process due to delays.

"The delay in divestment very often leads to withdrawal of foreign investors. This (Air-India) was a very good opportunity and I feel sorry that SIA, a very good airline, has withdrawn," Baijal said.

Divestment process had suffered a major setback yesterday when Hindujas, the sole bidder for Indian Airlines, withdrew on the ground of 'unfair treatment' and prejudging the issue of their reply to show cause notice on their eligibility.

Conveying SIA's decision to government, the Tatas said in a statement: "Air-India has always been very dear to the Tata's. Tata Sons is therefore assessing the situation arising from SIA's decision to withdraw with an open mind."

Tata officials, however, declined to comment on whether the group was talking to other players in the field for joining them for Air-India stake.

In a separate statement, SIA said it "did not think that it would be an easy endeavour, but was surprised by the intensity of opposition to the privatisation of Air-India from various quarters including certain sections of political groups, trade unions and the media.

"In such an adverse climate, SIA is not confident that it can play a useful and effective role," it said.

While thanking the Department of Divestment for conducting the privatisation exercise in a "very professional manner" SIA said that India would remain an important market for it and cited its investment in Australasia as another reason for withdrawal.

"All these factors have led SIA to the inevitable conclusion that the continuation of its bid for a stake in Air-India would not be in the best interests of the parties involved," SIA, which was reported to have been seeking higher stake in Air-India along with more favourable terms in the shareholders agreement, said.

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