I wasn’t about to write yet another post about Air India or the airline industry. However, when I read this mornings newspaper about the 15 vacant floors in the Air India building in Nariman Point I was speechless…of course, not so speechless that I couldn’t pen this piece.
Just to frame this, Nariman Point had been the business district of choice in Bombay until a couple years ago when it ceded the throne to Bandra-Kurla Complex (BKC). BKC has become the destination when you are looking for massive floor plates, however Nariman Point still has the cachet.
So this brings me to Air India. What are they thinking? Air India is consistently asking for money from the government yet they are sitting on 15 floors of prime real estate. They may not be in the real estate business but they could outsource that to someone like Knight Frank or Jones Lang LaSalle. The fact they are not monetizing the Air India building seems like a missed opportunity. Granted it might not move the needle much in terms of cash flow for such a debt ridden organization but it’s a step in the right direction.
One way to fix Air India would be to privatize the airline but that of course needs political will and that just won’t happen. Which is really too bad because in the current scenario the Indian government is throwing good money after bad.
In other news, over the past couple of weeks the industry has gotten more bad news:
– Air India needs more money for a bailout
– Fraport which owns part of the Delhi airport wants to exit India
– Foreign direct investment (FDI) for aviation is still up in the air (no pun intended)
– Kingfisher is still bleeding
Everyone is eagerly waiting for the foreign direct investments (FDI) norms for the aviation sector. Even if the rules come out tomorrow, I doubt any foreign investor is actively looking at the sector. They might have been looking at the space in 2007, but today it’s a much different picture. I love this quote from the CEO of Fraport India which sums up the current atmosphere in the sector:
this government doesn’t have any spine or drive. So I personally doubt that anything will happen in the lifetime of UPA-2
I love the candor of foreigners when they don’t have to suck up to politicians. I’m pretty sure with that quote, Fraport won’t be doing any more new business in India.