As hints get stronger, privatisation of Air India is now looking inevitable

The government may soon offload the loss-making Air India with Finance Minister Arun Jaitley favouring divestment of the national carrier.

Mired in debt for years, the state-owned airline has been staying afloat on taxpayers money and the government now seems to think that it is not worth spending more funds on its revival.

In an interview with DD News over the weekend, Jaitley said that Air India’s market share today is around 14 percent but the debt is Rs 50,000 crore. “In this country, if 87 or 86 percent flying can be handled by the private sector... then they can also do 100 percent,” he added.

This has been the strongest indication from the NDA government regarding privatisation of the state-owned airline.

Recently, the government seems to have warmed up to the idea of divesting its stake in Air India. The statement by Arun Jaitley resonates with the views of many top government officials who have recently floated the idea of privatising the carrier.

The aviation ministry is currently exploring various options, while the government's policy think-tank NITI Aayog is also looking into the issue, including a possible strategic sale.

Back in 2012, the Manmohan Singh-led United Progressive Alliance government had gave a Rs 30,000 crore bailout package spread over a decade to prop up Air India's equity. Out of this fund, the company has already received Rs 22,280 crore.

In an interview, then Civil Aviation Minister Ashok Gajapathi Raju told The Hindu that despite the Rs 30,000 crore bailout package approved for Air India in 2012, the national carrier remained a debt trap. He had said that the government cannot commit the taxpayers’ money for an eternity to revive the ailing company.

Chief Economic Advisor Arvind Subramanian, had also recommended that government should privatise Air India in the Economic Survey released this year.

 By the end of March 2015, Air India had accumulated a debt of Rs 51,367.07 crore. At the end of FY16, the airline’s debt had been reduced to around Rs 46,000 crore. Out of this, Rs 28,000 crore were short-term loans.

Earlier this month, Air India chief Ashwani Lohani, through a Facebook post, said that the debt acquired by Air India is at the root of all problems for the company.

Jaitley further said that when he was Civil Aviation minister for a brief period during 1999-2000 under the Atal Bihari Vajpayee government, he had asked for disinvestment of Air India, arguing that if it was not done, “nothing will be left to disinvest."