Saturday, August 12, 2017

Economic Survey: Air India privatisation will be key to improve Indian airlines' intl market share

New Delhi: Why exactly is the Modi government going ahead with plans to privatise/disinvest Air India? Is it because of the airline’s continued losses, demand for government funding under a previously approved turnaround plan and its dismal share of the domestic market? Or is Air India’s dismal share of international traffic, to and from India, the real driver behind the privatisation move? Well, Finance Minister Arun Jaitley had listed out the first three reasons when he initially divulged that the government was willing to look at disinvestment in the national carrier.

Now, in the Economic Survey Volume II, tabled in Parliament on Friday, the Chief Economic Advisor says disinvestment in Air India will help boost Indian airlines’ international market share. “Reforms such as privatisation/ disinvestment of Air India, creation of aviation hubs and reconsidering the 0/20 rule are some suggestions to improve Indian airlines’ share in the international market.”

The Survey further says there is a need for “committed action plan on privatisation/ disinvestment of the national carrier Air India to enhance its operational and management efficiency because it is a major carrier of international traffic to and from India, accounting for 11.4 percent of the total international travel. The recent announcement of the government towards privatisation of Air India is a well thought out decision.”

The government seems to lack clarity on its motives for disinvesting its stake in Air India, never mind the overall benefits of such an exercise. By not being sure of what it is selling out for, the government runs the risk of getting private investors in for wrong reasons and this could well derail the process itself.

11/08/17 Sindhu Bhattacharya/First Post