Narendra Modi government’s ambitious plan to revive the state-run carrier Air India by looking at options including selling the ailing airline to a private entity may have hit a serious snag with the civil aviation minister in his government himself proclaiming that it might be difficult to find any ‘bakras’ to buy the troubled behemoth.
“There are hardly any bakras around,” Minister for Civil Aviation Ashok Gajapathi Raju said to CNBC TV18 in an interview aired on Wednesday, when asked if the government would be able to find a willing buyer without writing off a significant amount of debt. “To get one is difficult, and businessmen are businessmen,” he added.
Earlier this week, Finance Minister Arun Jaitley finally spoke openly about the intent to exit the ailing state-run carrier in order to lighten the government’s debt burden. “History has given us a second chance that a good investor should come, which has credibility so civil aviation ministry will consider it,” Arun Jaitley had said referring to Air India’s proposed disinvestment, adding, “If 86% of flying can be handled by private sector, so it can also handle 100%.”
Air India, under intense competition from leaner, more efficient and often-cheaper private airlines, is reeling under a debt of about Rs 50,000 crore, with about Rs 28,000 crore in working capital debt, and about Rs 4,000 crore in interest burden alone. It has not turned profit in 10 years, since at least the year 2007.
However, today Raju posed the glaring reality check about low buyer interest, even as he laid out that the government is considering all options to bring back Air India into good financial health and taking the debt burden off the shoulders of the government. “Business as usual is not the option,” he said, adding that the earlier plans have not had a debt on the carrier’s finances. “I would not like to close any option,” Raju said.
Air India’s market share in domestic market has fallen to 14% in 10 years from 35% a decade ago, placing it third in the national ranking, behind Indigo, which commands about 40% of Indian skies, and Jet Airways, which has about 16% of the share. Air India also flies overseas, and commands 17% of the international traffic from and into India.
Air India has guzzled up taxpayer money over and over again but to no effect. The carrier has received bailout packages worth about Rs 24,000 crore out of a total Rs 30,000 crore approved, but has failed to revive its fortunes amid private airlines continuously gaining market share.
(This story was originally published on Wednesday, May 31 on www.financialexpress.com)