The central government is planning to sell its share in Air India’s erstwhile subsidiaries, a senior government official has informed Moneycontrol. The government will hold roadshows in India, Singapore, and Europe from May to gauge interest for the potential stake sale in Air India Air Transport Services (AIATS), Airline Allied Services (AAS) or Alliance Air, AI Airport Services (AIAS), Air India Engineering Services (AIES), and Hotel Corporation of India (HCI).
"The government has identified stake sale in these companies as a priority to meet its divestment target for FY26," the official said.
He added that the companies are currently held by Air India Assets Holding Limited, a special purpose vehicle (SPV) set up in 2019 for housing Air India's non-core assets and debt.
Last year, the central government had organised roadshows in Mumbai for the divestment of AIESL, the country’s biggest maintenance, repair, and overhaul (MRO) company, and received the approval of the concerned group of ministers (GoM) to initiate the divestment process for the company.
Another official added that the government plans to invite Expressions of Interest (EoIs) from interested bidders by August to ensure that the stake sale is completed by the end of 2025.
Emails sent to AIES, AIATS, AAS, AIAS, HCI, the Ministry of Finance and Ministry of Civil Aviation remained unanswered till the time of publishing.
These firms were subsidiaries of Air India when the government owned it, till 2021. Following the sale of Air India to the Tata group, the government decided to divest its stake in them separately.
The divestment of AIES, AIATS, AAS, AIAS, and HCI had received cabinet approval in 2017, along with the divestment of Air India. About Rs 3,000 crore was expected to be raised from the sale of these engineering and ground handling companies.
The government is also in the process of looking for a CEO for HCI and put out an ad earlier this week inviting applications for the post. Besides running hotels, HCI also provides in-flight catering services through Chefair, which has catering units in Delhi and Mumbai.
"Applications are invited from eligible candidates for the post of CEO, HCI. He will be based in Delhi and responsible for the performance of the company, including that of Chefair, its inflight catering services unit. He will be on contract for a period of three years, extendable by two years based on performance. The tenure can be extended or curtailed as per the requirement of the company," the government said in its advertisement dated March 11, 2025.
Moving away from setting yearly disinvestment goals, the government instead bundled receipts from divestment and asset monetisation under a broader Rs 47,000-crore miscellaneous capital receipts target in the 2025 union budget.
The shift reflects a less aggressive stance on privatisation as a source of non-debt capital receipts. In FY25, the department of disinvestment and asset management (DIPAM) launched initial public offerings (IPOs) for several key entities, including MSTC (Metal Scrap Trading Corporation), IREDA (Indian Renewable Energy Development Agency), etc. It also used the offer for sale (OFS) route to offload minor stake in central public sector enterprises such as HAL (Hindustan Aeronautics Limited), Coal India, RVNL (Rail Vikas Nigam), SJVN (formerly known as Satluj Jal Vidyut Nigam), and HUDCO (Housing and Urban Development Corporation), and collected a total of Rs 13,728 crore.
Last year, Tata-owned Air India was said to have considered a partnership with either Lufthansa Technik or Air France-KLM's engineering unit to pick up stake in AIES when it's up for sale.
The biggest of the former Air India subsidiaries, AIES saw its revenue from operations increase from Rs 1,881.91 crore in 2021-22 to Rs 1,953.40 crore in 2022-23, and its total revenue increase from Rs 1,906.52 crore to Rs 2,029.86 crore during the same period, the company had said in its annual report.
The company had earned a net profit of Rs 629.51 crore in 2022-23, down from Rs 829.26 crores in FY 2021-22. It had handled around 450 aircraft, providing line maintenance services to Air India, along with international operators such as Jazeera Airways, Oman Airways, Malaysian Airlines, Kuwait Airways, Tiger Scoot, China Airlines, MA Indo Airlines, Egypt Air, etc, and Indian operators like Air Asia India, Go Air, SpiceJet, Fly Big, and Vistara.
In January, Murali Ramachandran, President, India and Southeast Asia, Celebi Aviation, had told Moneycontrol that for growth of the third-party ground handling services market in the domestic aviation sector in India, the central government will have to move forward with the divestment of AIAS and ensure that domestic airlines are not allowed to carry out ground handling for other airlines.
"AIAS has the advantage of being present in all domestic airports and legacy agreements with Air India, which present a challenge for newer players looking to expand and take a pie of the domestic market. While the situation is improving with airlines coming out with tenders for ground handling services, any reversal of government policy would be detrimental for private players," Ramachandran said.
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