Explained: why Air India’s transfer to Tatas has been delayed again

January 27 has been set as the date to complete Air India’s transfer to the Tata Group, a delay from the earlier deadline of late December. After delays in finalizing the airline’s balance sheet and obtaining necessary approvals from global regulators, the target timeline for the deal’s closing was extended to the end of January.

What steps are still left in the transfer of the airline to Tatas?

According to Air India officials, the airline will share its balance sheet with the Tata Group on Monday for a review, expected to be completed on Wednesday. After this, on Thursday (January 27), the delivery will probably take place. The balance sheet closing date has been set at 20 January.

Why was the transfer delayed in the first place?

On October 11, the Center had issued the Letter of Intent (LoI) to the Tata Group, confirming its willingness to transfer 100% stake in the airline to the Mumbai-based conglomerate. At the time, the expected timeline for the transfer was set at the end of December. Due to various pending approvals, this date has been extended to the end of January.

Why is there a delay in finalizing the balance sheet?

The final balance is made with the approvals of the various regulators, lenders and lessors of the airline. This balance sheet will be provided to the Tata Group and is expected to represent the loss of Rs 20 crore that Air India suffers daily, up to the closing date. In addition, citing a response from RTI, The Indian Express reported on Sunday that several government departments and ministries were awaiting payments of Rs 278.49 crore to Air India until October last year.

For what costs is this contribution intended?

This outstanding amount includes Rs 244.78 crore from more than 700 government departments and sections as of September 2021 and Rs 33.71 crore for various VVIP flights on July 27, 2021, according to the data.

This also includes dues of Rs 7.20 crore from the Prime Minister and flight allowance of Rs 6.14 crore from the President. The airline has already started to recover the outstanding dues from the various government departments and as of November 30, 2021, Rs 30.38 crore has been recovered by the airline.

Has the government taken steps to ensure that such contributions do not increase?

The Ministry of Expenditure, Ministry of Finance, in an office memorandum dated October 27, 2021, had instructed all ministries and departments to immediately collect the dues from Air India, in addition to asking these departments to purchase Air India air tickets in cash only.

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However, on December 31, the Expenditure Department amended its previous guideline and said that “in all cases of air travel where the Government of India bears the cost of the air passage, the concerned officials may only travel on Air India and air tickets must be purchased directly from Air India.” or by using the services of the three authorized travel agents, namely Balmer Lawrie & Company Ltd, Ashok Travels & Tours (ATT) and Indian Railways Catering and Tourism Corporation.”

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