MUMBAI -- Uncertainty hangs over the Indian government's plans to sell Air India as onetime prospective buyers shun the troubled carrier.
Asked Friday whether Singapore Airlines was still interested in bidding, CEO Goh Choon Phong replied that he had said no such thing and that any developments on this front would be announced. The executive remarked that Singapore Air looks to focus Indian operations on Vistara, a joint venture with the Tata group conglomerate that plans to begin international service in the latter half of the year. Vistara is seen as "the undisputed leader in terms of product quality and services" in India, Goh said.
Senior executives at Singapore Air have repeatedly said to "keep the option open" on the potential bid for Air India. Goh's comment struck a decidedly more negative tone toward that.
The government wants to sell 76% of Air India along with all of Air India Express. As of March 28, prospective buyers were required to submit expressions of interest by May 14, with qualified interested bidders to be informed May 28.
Bidding terms were also relaxed. Consortia initially could not alter their composition after formal expressions of interest. Now they can, but only once.
It was also believed that the buyer was expected to take the airline public within three years, but the government has denied this.
While other Indian airlines have distanced themselves from the deal, the Tata group, India's biggest conglomerate, has emerged as a potential purchaser.
Tata Sons Chairman Natarajan Chandrasekaran said in an interview that the conglomerate will decide whether to bid on Air India by the deadline.
Tata's interest in the air industry is not surprising: It founded the forerunner of Air India and has the financial clout to buy it back from the government.
But Tata already has airline operations in India by virtue of Vistara and a joint venture with Malaysian budget carrier AirAsia. Whether it will add to its portfolio is an open question.
There are reasons prospective buyers have backed away from Air India. The company is saddled with about 500 billion rupees ($7.4 billion) in debt, and high costs weigh heavily on its bottom line, with the carrier posting an unconsolidated after-tax loss of 57.6 billion rupees for the year through March 2017.
The airline also has a reputation for delays and poor service. Passengers boarding planes are often met with filthy seat tables and trash from previous flights.
Cabin crews can be less than helpful. One woman was seen being ignored by a nearby flight attendant as she struggled to stow carry-on luggage into an overhead compartment. A man who asked for help adjusting his monitor was simply told to "keep trying."
But the government is determined to land a deal, given the vast sums it spends to keep the carrier aloft. Financing operations in the year ended March 2016, for example, cost 60 billion rupees.
Domestic airline IndiGo, owned by InterGlobe Aviation, had been seen as the most likely suitor. But on April 5, InterGlobe President Aditya Ghosh dashed hopes for a deal. "From day one, IndiGo has expressed its interest primarily in the acquisition of Air India's international operations and [low-cost carrier] Air India Express," Ghosh said in a statement. "However, that option is not available under the government's current divestiture plans for Air India."
Ghosh's statement came after the government announced bidding terms and details of Air India's finances on March 28. It was also a shock, as IndiGo was clearly interested when the privatization plans were first unveiled in June 2017.
But the terms of the deal required purchasing both the international and domestic operations of Air India -- a bridge too far for IndiGo. Ghosh reiterated in his statement that "we do not believe that we have the capability to take on the task of acquiring and successfully turning around all of Air India's airline operations."
IndiGo is known for its efficiency and accounts for nearly 40% of domestic flight passengers. But it concluded that Air India's subpar domestic operations were not worth the trouble.
Jet Airways, the nation's second-largest airline, also turned its back. "We welcome the government move to privatize Air India. ... However, considering the terms of offer in the information memorandum and based on our review, we are not participating in the process," Deputy CEO Amit Agarwal said in a statement.
Making matters worse, potential foreign buyers including Emirates and Qatar Airways have reportedly passed on Air India as well.
Whether acquiring the struggling airline makes good business sense remains to be seen.
Nikkei staff writers Mayuko Tani in Singapore and Kiran Sharma in New Delhi contributed to this article.