Air India, the national carrier of India, which is due to be sold to the Tata Group this month, saw some holiday trouble in the last week of 2021, as the airline briefly pulled all its inventory from Global Distribution Systems such as Amadeus. Devas Multimedia, a Bengaluru, India-based company in the business of Satellite Communications, has a long-standing dispute with the Government of India, and Air India treated in this case as the “alter ego” of the government. Air India pulls inventory from GDS as airline funds are impounded.
In June 2021, the shareholders and investors of Devas Multimedia had filed a case in US Courts to attach the assets of Air India, which it had then argued, is legally indistinct from the Union of India. The company argued that the flag carrier of India is treated as a party liable to pay the dues of the arbitration award, awarded in the favour of Devas Multimedia to the tune of $111 million plus costs and interest. Devas Multimedia’s investors and shareholders similarly plan to pursue seizure of other Indian assets across the world.Â
The Superior Court in the district of Montreal ordered the seizure of cash collected by the International Air Transport Association (IATA) on behalf of Air India and the Airport Authority of India in the matter. As per a Devas spokesperson, more than $30 million have been seized as a consequence of their IATA action. Per some news reports, Devas shareholders have seized $6.8 million worth of Airport Authority of India’s (AAI’s) funds with the IATA.
IATA serves as an intermediary. Through its billing and settlement plan (BSP), the association collects funds from ticket sales. This allows travel agents globally to issue tickets to their customers via the IATA facilities where they can deposit funds and it acts as a clearinghouse to pass on these funds to the respective airlines. IATA also collects route navigation charges from airlines to be passed on to AAI for flights operating over Indian airspace. In the financial year 2019-20, AAI collected a total of $483 million, which is over 25 percent of its revenue for the year.
Devas Multimedia, which is pursuing the action under various entities incorporated in Mauritius, won two separate orders on November 24 and December 21 to enforce the arbitration awards against India.Â
For Air India, global distribution systems (GDS) like Amadeus or Travelport are responsible for more than half the ticket sales. The airline reacted by removing its inventory from the GDS systems, sending the travel trade around the globe in a tizzy about the airline, it being peak travel season due to the holidays. The inventory was restored, but for the moment, Air India is only allowing tickets to be issued for payments made against a credit card, where no funds are held with IATA.Â
The impact of this move on the sale of the airline to Tata Group, due to be transferred this January, is yet to be assessed, but either way, the Tata Group is not going to be dragged into this legal tussle, with the group already having received protection against any legal issues the airline may have to carry forward into the acquisition.
