Pawan Hans selloff to invigorate market for helicopter services

The privatisation of Pawan Hans will go a long way in providing a much-needed boost to India’s diminutive civil helicopter industry by enhancing its competitiveness as well expanding the market, industry veterans have said. On Friday, the Department of Investment and Public Asset Management (DIPAM) declared the consortium of Star9 Mobility as the winning bidder for the 37-year-old company after three previous attempts at its divestment were unsuccessful.

The Star9 Consortium – comprising Big Charter, Maharaja Aviation and the Cayman Islands-registered Almas Global Opportunity Fund – made a bid of Rs 211.14 crore for Pawan Hans. As per procedure, the reserve price for the sale was fixed at Rs 199.92 crore, based on a valuation carried out by SBI Market Capital and RBSA Advisors.

Welcoming the move, the father of the country’s low-cost carrier (LCC) revolution and founder of helicopter charters firm Deccan Aviation, Captain GR Gopinath, told Business Today, “Any privatisation is a good move as long as it doesn’t lead to a monopoly or cartelisation. Thus, the privatisation of Pawan Hans is good for the consumer and the country as it will help in expanding the market and increase competition.”

Like several other government-owned entities, Pawan Hans has played a leading role in providing transportation and cargo services to the state-owned Oil and Natural Gas Corp. (ONGC) for its offshore operations, inter-island connectivity, helicopter tourism and troopers deployed in Left Wing Extremism (LWE) infested areas since launch in 1985. However, its privatisation was necessitated with market dynamics evolving.

“The privatisation of Pawan Hans is a good move by the government. The company needed new synergies and, with this development, a higher level of competitiveness and better procedures will come into being for the rotary-wing segment,” industry veteran Pushpinder Oberai observed. “This will also provide a boost to the segment, which is presently a minuscule part of India’s aviation industry. It remains to be seen how the winning consortium moves ahead with turning around the company to deliver a strong product for the good of the industry and the country.”

Selloff in the last leg

As the deal for Pawan Hans’ sell-off moves to the final stage, including the issuance of the Letter of Award (LoA), inking of the Share Purchase Agreement (SPA) and closing of the transaction, experts said it would help in reinvigorating the industry.

“The fact that the company’s operations were heavily subsidised often led both central and state government agencies to award them contracts without bids resulting in compromises on price, quality and technical capability,” said Gopinath.

“The development will also help normalise the playing field for the industry in India. That will help to put pressure on the authorities to optimise the operational conditions for the industry, which may help bring back growth rate from the beginning of the century,” concurred Per Smedegaard, former CEO at a leading helicopter company.

Pawan Hans reported consecutive losses in FY2019, 2020 and 2021.

Scaling up civil segment

A 51:49 joint venture (JV) between the government and ONGC, Pawan Hans enjoyed a near-monopoly in the market, which also restricted its scale of operations and, thereby, fleet size. The company presently has a fleet of 42 helicopters, with 41 owned. Its owned helicopters have an average age of over 20 years, with three-fourths of them no longer manufactured by the original equipment manufacturer.

“Forget developed aviation markets like the US or the EU, even a country like Brazil has more helicopters when compared to India,” remarked Gopinath.

“The total number of registered civil helicopters in India is currently around 230. In Brazil, the city of Sao Paulo alone has more than 700 helicopters,” said Smedegaard. “The privatisation of Pawan Hans will, therefore, help bring a new perspective to the industry. Earlier, they were operating as a government company with a specified agenda.”

When it comes to helicopter services, the country is yet to fully utilise their various applications in industry segments such as the power sector, and search and rescue.

“Helicopters can play a critical role in the inspection and maintenance of high voltage power lines in difficult terrains like those in the Himalayas to reduce transmission losses,” asserted Captain Gopinath.

Big Charter, one of the members of the three-way Star9 Consortium, operates the regional airline flybig in the west, central, south and north-east India. When BT reached out to the company’s managing director Sanjay Mandavia for comment, he merely said, “We are honoured to have been chosen as the strategic buyer for the Miniratna (Pawan Hans),” before excusing himself to attend to the preparations for the Monday launch of flybig’s Delhi-Shillong flight.