Government gives up on reviving lossmaking Air India

NEW DELHI: It seems India has given up on loss-making Air India staging a turnaround. The government on June 28 approved plans to privatise the national carrier as it seeks to exit a business in which it is unable to make money.

Air India is bleeding cash and faces tough competition on both domestic and international routes. For many years, people in the aviation industry have jokingly called Emirates as the “national airline of India” due to the Dubaibased carrier’s domination of India’s international traffic.

Airlines such as Qatar Airways and Etihad Airways, which has an alliance with India’s Jet Airways through a significant shareholding, have also grown their share of Indian passengers flying foreign routes.

IndiGo dominates the domestic market with a 40 per cent share while budget airlines SpiceJet and AirAsia India are on a growth path.

From being the country’s largest carrier, Air India, known as the Maharaja (great king) of the skies, has seen its domestic share decline to just 13 per cent.

It must be made clear, however, that Air India remains a formidable player in the Indian aviation sector, and the government’s decision to offload the debt-laden airline looks based on its unwillingness to pour more money into the company without being certain about its financial viability.

“I think really where Air India stands now, it is almost a matter of existence,” Arvind Panagariya, vice chairman of the government think-tank Niti Aayog, said recently.

He said Air India’s debt is already 520 billion rupees (about US$8 billion) and about $618 million of debt is being added every year “so this is simply not sustainable.”

The airline received a $5.8 billion lifeline from the previous government in 2012. So, who may buy a loss-making airline with a growing debt pile?

There are a couple of interesting probable suitors at present. — Bernama