- Not so long ago, Air India used to be not only synonymous with the pride of the nation in the global aviation industry but also provided a distinct identity for the Indian travelers opting for the carrier by default. As the aviation industry evolved and with the advent of newer players, the almost monopolistic reign enjoyed by Air India had to make way for private entities who succeeded in providing welcome comfort, quality services, pleasant experience, and most importantly, ensured the patrons are accorded top priority by treating them with top-notch standard protocols at par with international expectations.
PC: WINGS JOURNAL
- As the extremely competitive and volatile aviation market kept oscillating between uncertainties brought about by extraneous factors like rising fuel expenses, unviable routes, rising maintenance, and repair operations, as also a cut-throat race to establish palpable identity, Air India’s debt increased on the back of mounting losses. Though successive governments intermittently infused fiscal packages to resurrect and make the Maharajah viable, the loss-making entity never recovered from the sustained blows leaving the government with no option but to embrace disinvestment eventually.
- In the current scenario, the government’s portfolio should have no role for Air India and as such, announcement this week that the Maharajah has received multiple expressions of interest for the airline and will be taking the transaction to the next stage finally appears to fructify after the long drawn out strategic disinvestment processes. Media reports suggest the potential bidders include some employees of the airline and the Tata group as well. If you recollect, the airline emerged out of Tata Airlines which was set up in 1932 and was subsequently renamed Air India in 1946.
PC: Gan Yung Chyan
- As we are aware, Air India has been mismanaged beyond redemption and has been a consistent drain on the exchequer as the debt at the end of 2018-19 standing at Rs. 58, 256 crores amply suggest. Selling it has not been easy because of the consequences of years of accumulated losses and the pandemic has had a severe impact on the aviation industry returning Air India with a net loss of Rs. 2,570 crores in the April-June quarter. Unlike last time around, the government is aiming to sell the entire stake in the airline and its subsidiary Air India Express as also 50% shareholding in Air India SATS Airport Services.
- In a welcome move, the government has also allowed potential bidders to account for the debt in their valuation of the business by transferring the amount to a special purpose vehicle. However, the government must pragmatically consider amending relevant ownership laws in civil aviation allowing foreign investment, including foreign airlines, beyond the present limit of 49% by letting go of effective control from the Indian nationals as well.
PC: Nick Stockton
- This allows a wider pool of capital and management expertise in running Air India resulting in a win-win for both the government as well as investors. Indian aviation field cannot continue to remain insular from foreign merits and should be open to the world for business. Insulating from external expertise would render the lucrative but challenging Indian aviation industry uncompetitive. A realistic move soon is in order!