Tata withdraws airport privatisation bid after bank licence

Less than a fortnight after the Tatas pulled out of race for getting a banking licence citing stringent norms, the Cyrus Mistry led group Monday told CNBC-TV18 that it would not be participating in the privatisation of airports either – a diversification drive that was hailed as Tata’s efforts to expand its presence in the aviation space.

Also Read: Tata Group withdraws application for banking license

This means that the group’s plans to bid for the airports have got aborted even before take off. The move has been prompted following a key pre-qualification requirement in the request for qualification documents (RFQs) that would make Tata Realty Infrastructure (TRIL) – the company that was going to bid for the Chennai Airport – ineligible, reports CNBC-TV18’s Ronojoy Banerjee.
 
The RFQ document states, “The SPV to be formed shall not include any equity ownership of a scheduled airline, cargo airline or its associates in excess of 10 percent of the total equity of such SPV.” Since the Tatas have entered into a 51-49 joint venture with Singapore Airlines and TRIL an associate of the holding company, under the current norms the group cannot participate in the bids.
 
Citing this very clause the TRIL told CNBC-TV18 that it would not be bidding this round. “As the conditions in the RFQ documents stand, TRIL is not eligible to bid for the upcoming airports,” a company spokesperson said. She however added that TRIL would consider participation in the bidding process once the rules were more favorable to the Tata group.
 
CNBC-TV18 had reported last week that concerned about this clause, Tatas had written to the civil aviation secretary KN Srivastava requesting the term “associate” be replaced by “subsidiary” in the pre-qualification document. This would have allowed the TRIL to foray into airport development months after its parent holding firm stitched an alliance with Singapore Airlines.
 
A senior government official said that the government was not looking at changing the clause. “The requirement to ensure that there is no cross holding between airport developer and a scheduled airline was a well thought out one. It would have otherwise led to a conflict of interest that cannot be allowed.” The source also added that other requirements such as mandatory absorption of existing employees of Airports Authority of India would also not be diluted.
 
The Tatas were planning to bid for the Chennai Airport, which incidentally is the headquarters for its other airline venture Air Asia in which the group holds 30 percent stake.