Tuesday, May 30, 2017

As hints get stronger, privatisation of Air India is now looking inevitable

The government may soon offload the loss-making Air India with Finance Minister Arun Jaitley favouring divestment of the national carrier.

Mired in debt for years, the state-owned airline has been staying afloat on taxpayers money and the government now seems to think that it is not worth spending more funds on its revival.

In an interview with DD News over the weekend, Jaitley said that Air India’s market share today is around 14 percent but the debt is Rs 50,000 crore. “In this country, if 87 or 86 percent flying can be handled by the private sector... then they can also do 100 percent,” he added.

This has been the strongest indication from the NDA government regarding privatisation of the state-owned airline.
Recently, the government seems to have warmed up to the idea of divesting its stake in Air India. The statement by Arun Jaitley resonates with the views of many top government officials who have recently floated the idea of privatising the carrier.

The aviation ministry is currently exploring various options, while the government's policy think-tank NITI Aayog is also looking into the issue, including a possible strategic sale.

Back in 2012, the Manmohan Singh-led United Progressive Alliance government had gave a Rs 30,000 crore bailout package spread over a decade to prop up Air India's equity. Out of this fund, the company has already received Rs 22,280 crore.

In an interview, then Civil Aviation Minister Ashok Gajapathi Raju told The Hindu that despite the Rs 30,000 crore bailout package approved for Air India in 2012, the national carrier remained a debt trap. He had said that the government cannot commit the taxpayers’ money for an eternity to revive the ailing company.
29/05/17 Moneycontrol.com