Air India (AI) is once again on the block with Finance Minister Arun Jaitley-led committee exploring privatisation. Will it be a garage sale or will assets be sold in bits and bobs to maximise returns? Between 51 and 100 per cent—the quantum of divestment—there are many numbers waiting for a possible compromise. The loss-making Maharaja is crumbling under Rs 50,000 crore debt. It gave up profitable routes, has legacy workforce with an average employee age of 52 and is on a Rs 30,231 crore life support from taxpayers. Still, suitors are queuing up for the good parts, with at least two players IndiGo and Tata Group-Singapore Airlines emerging as frontrunners.
AI’s downfall began with the Indian Airlines merger in 2007 and the acquisition of over 100 airplanes spending gobs of money. The CAG termed it ‘a recipe for disaster,’ and the CBI is probing alleged irregularities. From being a market leader on domestic routes with 35 per cent market share, its 14 per cent share now makes AI an also-ran. Earlier too, the NDA government considered divestment, but was stuck in a political and HR quagmire.
Amid mounting losses, falling market share and intense competition, Niti Aayog recently proposed 100 per cent privatisation, but one may want to admire the tenacity of those opposing the move. Few within AI and the Ministry of Civil Aviation still prefer to stay in the game by restructuring debt. Others believe, by cutting the cord from the parent—government—AI can offer services on market-dictated terms. Now is the time to decide whether to revive operations and protect the taxpayer’s money or to sell bits that could have value to someone else.
07/07/17 New Indian Express
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AI’s downfall began with the Indian Airlines merger in 2007 and the acquisition of over 100 airplanes spending gobs of money. The CAG termed it ‘a recipe for disaster,’ and the CBI is probing alleged irregularities. From being a market leader on domestic routes with 35 per cent market share, its 14 per cent share now makes AI an also-ran. Earlier too, the NDA government considered divestment, but was stuck in a political and HR quagmire.
Amid mounting losses, falling market share and intense competition, Niti Aayog recently proposed 100 per cent privatisation, but one may want to admire the tenacity of those opposing the move. Few within AI and the Ministry of Civil Aviation still prefer to stay in the game by restructuring debt. Others believe, by cutting the cord from the parent—government—AI can offer services on market-dictated terms. Now is the time to decide whether to revive operations and protect the taxpayer’s money or to sell bits that could have value to someone else.
07/07/17 New Indian Express
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