Air India Disinvestment: Break-Up an Option as Narendra Modi Govt Aims For Quick Sale, Claims Report

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New Delhi, July 9: Centre is reportedly exploring the option of selling Air India in parts, in order to draw more number of bidders. Aviation Ministry sources, close to the decision being taken on disinvestment, claimed the Prime Minister’s Office is inclined towards dividing the six subsidiaries of Air India, in order to draw more lucrative offers.

The rationale behind the break-up is to make the carrier more attractive to potential buyers, as the takeover of complete national carrier would be perceived as unprofitable by the market players, claimed an aviation ministry official while speaking to Reuters. “Let us be realistic. It’s very clear that a single buyer cannot buy an entire state-owned company,” he was quoted as saying.

The reports of government mulling to break-up the carrier for its sale, comes weeks after the Union Cabinet gave the ‘in-principal’ approval to privatise the airline.

The decision to disinvest Air India was being contemplated by the erstwhile UPA government as well, since the carrier has been incurring losses following the entry of private carriers. The company is currently reeling under a debt of $8.5 billion (approx. Rs. 55,000 crore).

In 2012, the central government had attempted to bail out the airline by pumping $3.6 billion (approx. Rs. 23,200 crore) into its operation. However, airline failed to bounce back commercially.

Air India’s market share continued to fall rapidly over the past decade, with the carrier now retaining only 13 per cent of the commercial market. On domestic routes, the airline has been completely outperformed by private carriers, especially the Jet Airways and IndiGo Airlines, which are leading the commercial charts.

The process to privatise Air India is expected to be formally initiated early next year. According to reports, IndiGo, informally, sent out feelers to the Aviation Ministry, expressing its interest to acquire parts of the state carrier. Earlier, reports also claimed that Tata Group, which originally owned the Air India, prior to its nationalisation in 1953, sent out feelers to Centre to reacquire the airline.

However, the disinvestment of Air India has evoked sharp response from the employee unions. The Air Corporations Employees’ Union (ACEU), which represents nearly 8,000 of the 21,137 employees, said the government would face an “industrial revolt” if the decision to disinvest the airlines is not rolled-back.

Apart from the ACEU employees, the decision to privatise Air India would also be protested by All India Railwaymen’s Federation, which represents 33 lakh employees in the Indian Railway. “AIRF will be supporting the protest of Air India employees. The decision to disinvest the airlines is being taken to benefit the private sector,” AIRF general secretary Shiv Gopal Mishra told India.com.

“If Air India is making losses, it is the fault of the government. The former Aviation Minister Praful Patel allowed the entry of private carriers and allotted them the primary routes, which added up to their revenues. If you want AI to be competitive, then it should be provided the busy routes which generate revenue,” he said.

Mishra further claimed that Air India’s privatisation bid raises fear whether the government would disinvest the Indian Railways as well. “Tomorrow, they might give the in-principal approval to privatise Railways as well, since we are not making commercial gains. 2, 36,00,000 people use the Railway for commutation. 90 per cent of the tickets are subsidised. What should the government do if we incur loss? Should the Railways be privatised? Definitely not. Because, state-run services are meant to serve the public, not maximise profits,” the union leader added.

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