India’s national carrier in foreign hands? Cabinet may allow foreign airlines to bid for Air India

Air India may end up in foreign hands as the government, in its bid to exit the loss-making national carrier, may allow foreign entities to bid for troubled airlines’ strategic divestment. The government has reportedly circulated a draft Cabinet note, on divestment of the troubled airline, among its ministries.

The circulated draft includes different ways to divest government’s stake in Air India and recommends allowing foreign entities to bid for Air India’s strategic divestment, CNBC-TV18 reported citing unnamed sources. The draft also suggests selling of Air India’s profitable subsidiaries separately and appointing a transaction advisor to strengthen its business strategy, the report adds.

“This should have been done much earlier because Air India had been losing large chunks of money every day for the last ten years,” said Denzil Keelor, former Advisor to Directorate General of Civil Aviation (DGCA). According to Keelor, the whole process will take about a year to complete.

“It was in the same boat as Kingfisher but since AI is a government company the ministry has been giving taxpayer money to the airline to carry on,” Keelor said. Air India had been running a loss over the past decade — barely making any operational profit except in FY16.

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Meanwhile, a joint forum of unions representing Air India employees has written to Union Civil Aviation Minister Ashok Gajapathi Raju opposing the move, as reported by India Today.

“The recommendation to privatise Air India has come at a time, when Air India is showing all-round progress, profitability and over 33% increase in the numbers of passengers,” the letter is reported to have said.

“We will approach the government first, but if they don’t listen to us we will agitate. How can the Niti Aayog CEO file a report in 15 days? It shows he has written it sitting in a room, without evaluating our assets. We are not responsible for the mess of Air India, government policies are,” JB Kadyan, Secretary General, ACEU (Air Corporation Employees Union), told India Today.