The civil aviation ministry will soon look for Air India’s first professional chairman and managing director (CMD).
The ministry had recently announced V. Thulasidas as the new CMD and Vishwapati Trivedi as joint MD to spearhead the entity that will emerge when Air India and its domestic counterpart, Indian, merge.
The new head will be chosen from the aviation industry and will replace Thulasidas, who completes his extended term this fiscal year.
“That was always the plan,” said a senior ministry official who didn’t want to be named. “To bring in a professional head to oversee the new airline and strengthen it in the existing market (after the merger).”
However, there would not be any other changes in the board of directors of the newly announced National Aviation Company Ltd, under which the Air India brand will be flying, the official said.
Air India, which completed 75 years of operations, initially started off as a private airline in 1932, owned by the aviation department of Tata Sons Ltd. But over the past few decades, with the advent of numerous foreign airlines in the country, Air India has seen its market share dip: Some 75% of the international passengers to and from India fly foreign airlines.
Aviation experts have been demanding that the state-carrier, given the scale of its operations, be run by a professional manager rather than an Indian Administrative Service (IAS) officer, who typically heads public sector companies in the country. Both Thulasidas and Trivedi are career bureaucrats from the IAS.
With 111 aircraft on orders over the next four years, the airline is set to be the fourth largest carrier in Asia and will need a core professional team to streamline the merger process, said Kapil Kaul, a Delhi-based analyst with Centre for Asia Pacific Aviation.
Air India is also expected to go in for an initial public offering (IPO) for selling about 10-20% of its shares. The airline’s IPO had been postponed owing to the market conditions last year. But the merger of the two airlines has seen the airline hiring accounting firms to revalue its assets, such as lucrative land and buildings, which will help bolster its balance sheet ahead of a potential stock offering next year.
The existing land banks of both airlines are highly undervalued. Air India’s landmark headquarters at Mumbai’s Nariman Point, for example, is valued at a token Re1. The evaluation exercise is expected to be completed by the end of this month, raising the value of the existing asset base, at least on the company’s books, to nearly Rs8,000-10,000 crore.