The Union Cabinet will soon take a call on privatisation of loss-making Air India with NITI Aayog suggesting that taxpayers’ money being pumped into the airline can instead be used on health and education. Staying afloat on little over Rs 30,000 crore bailout package extended by the previous UPA regime, Air India is working on ways to improve its financial position amid stiff competition.
The Civil Aviation Ministry is already looking into the recommendations made by NITI Aayog for the national carrier’s revival. Finance Minister Arun Jaitley had last week pitched for Air India’s disinvestment saying the carrier’s market share is just around 14 per cent whereas the debt burden is Rs 50,000 crore.
A top government official today said the Cabinet is expected to take a decision on whether to privatise Air India, whose financial situation is “very bad”. “Financial position of Air India is very bad. Niti Aayog’s view is that government should spend money on health, education, instead of spending Rs 30,000 crore on Air India,” the official told PTI. The Cabinet “will soon take call on privatisation of Air India”, he added.
While the exact contours of proposed privatisation could not be immediately ascertained, the possibility of strategic stake sale, as well as outright disinvestments, are being considered.
Since the merger of Indian Airlines with itself, Air India has been in the red. However, it posted an operational profit of Rs 105 crore on account of low fuel prices and increased passenger numbers in 2015-16.
On Tuesday, the Civil Aviation Ministry said all possible alternatives are being considered to make Air India viable, even as it asserted that the clock cannot be put back on the Indian Airlines merger.
Minister of State for Civil Aviation Jayant Sinha had said whatever that would be done for Air India will be in national interest.
“We are considering all possible alternatives (for Air India)… We are discussing (what can be) the winning strategy for the airline,” he had said.
About Air India and Indian Airlines merger that happened in 2007, which is seen as a reason for the problems of the national carrier, Civil Aviation Minister Ashok Gajapathi Raju had said the clock cannot be put back on the deal.
Also, discussions on disinvestment of Air India have gathered momentum at a time when the CBI has registered three FIRs and a preliminary enquiry (PE) to go into the controversial decisions made by the erstwhile UPA government with regard to Air India, including surrender of profitable routes to favour private airlines.