Maharajah’s tear

For now, make the carriers world-class

Disinvestment in the aviation sector has been grounded even before take off. With the Tatas finally giving up their bid for the national carrier Air India, plans to privatise the airline have come a cropper. As for the domestic carrier, the less said the better. Dithering and disqualification by the government, not to speak of political string-pulling, wrecked all attempts to privatise Indian Airlines. It will be presumptuous now to think the government can salvage the situation somehow in the short run. A sensible course is to forget about the privatisation exercise for a while and focus on running the airlines on commercial lines. This calls for a massive infusion of funds to acquire aircraft and modernise the fleet for both airlines. The government has already announced its plans for funds infusion and fleet modernisation for IA. Perhaps it should replicate the exercise for AI as well, keeping in mind its requirements as an international carrier.

Months ago, when the Singapore Airlines pulled out from the Tata consortium to acquire Air India, it appeared that India could well have missed a golden opportunity to privatise the aviation sector. As events proved last week, these fears have come true. To the Tatas, who created and nurtured the airline for several decades before the government took it over, the decision to give up their bid — citing inability to cobble together a consortium — must have been quite painful. Post September 11, the global aviation scene has become extremely turbulent, with even the best managed airlines exhibiting a tendency to nosedive. In this scenario, Air India — saddled as it is with an ancient fleet — does not stand a fair chance to attract suitors. Unfortunately, like Indian Airlines, AI too became a victim of circumstances. Following the aborted attempt to privatise AI, the government has decided against calling rebids and instead announced its plans to raise the foreign equity cap in the aviation sector to 49 per cent, besides allowing foreign airlines in the domestic sector.
These policy decisions may hopefully spur investment in the aviation sector at a later stage when the skies turn indigo blue. For the present, let the government do its bit to get both IA and AI in shape on a priority basis. Until that’s achieved, it is better that the proposal to disinvest the airline sector is put on the backburner.