Proposed Air India sale may affect ground-handler Sats

Sats owns half of Air India Sats, a joint venture between Air India and the Singapore firm. Air India has a debt of about $10.8 billion.
Sats owns half of Air India Sats, a joint venture between Air India and the Singapore firm. Air India has a debt of about $10.8 billion. PHOTO: REUTERS

The proposed sale of Indian national carrier Air India may affect Changi Airport's biggest ground-handling firm Sats.

Sats, which provides airlines with passenger, baggage and cargo services, owns half of Air India Sats (Aisats), a joint venture between the Singapore firm and Air India.

Set up in 2010, Aisats currently operates in five airports in India - Bangalore, New Delhi, Hyderabad, Mangalore and Thiruvananthapuram.

The future of Aisats has come under scrutiny since the Indian government announced last week that it will allow foreign firms to own up to 49 per cent of Air India.

While foreign airlines could previously own up to 49 per cent of other Indian airlines, the government had, until now, prohibited such an investment in Air India.

The plan is to sell Air India as a package, along with its ground-handling arm Aisats and budget carrier Air India Express.

When asked whether Sats is concerned about the developments and possible sale, a spokesman told The Straits Times: "There is no reason why a sale of Air India would affect our stake or influence in Aisats."

She added that Sats remains committed to the Indian market.

While Sats believes there will be no direct impact on its Aisats operations, analysts cautioned that the situation could change in the coming months if Air India is sold.

The Singapore firm would have to work with a new co-owner who may or may not be aligned with its plans and visions for Aisats, they said. However, some noted that a new, more business-oriented and financially stable partner would be good for Aisats.

Mr Shukor Yusof, aviation analyst at Endau Analytics said: "It would be in Sats' interest to see Air India rehabilitated because it's a profitable business."

In the year ending March 31 last year, Aisats reported revenues of $127 million while profits remained stable at about $10 million compared to the year before that.

During the last financial year, the Indian ground-handler handled 92,000 flights, 22 million passengers and 273,000 tonnes of cargo.

The Straits Times understands that the proposed sale of Air India and how it could impact Aisats was top of the agenda when the Aisats board met in Singapore last Friday. Details of what was discussed, however, were not made public.

 

India's Minister of State for Civil Aviation Jayant Sinha said last week that the Indian government expects to divest its stake in Air India - though it may retain a minority share - by the end of the year.

He told Indian business news website Moneycontrol that so far, only Interglobe Aviation, which runs Indian carrier IndiGo Airlines, has officially expressed its intent to buy the national carrier.

Singapore Airlines, which owns 49 per cent of Indian carrier Vistara - with the remaining stake held by Indian conglomerate Tata - said it is keeping its options open, when asked if it would bid for Air India.

The Indian national carrier has a debt of about 520 billion rupees (S$10.8 billion).

A version of this article appeared in the print edition of The Straits Times on January 15, 2018, with the headline 'Proposed Air India sale may affect ground-handler Sats'. Print Edition | Subscribe