Air India future: Amid market share losses and CBI cases, Modi government gives 3 months to decide

Air India, under acute competition local private airlines, is reeling with a debt of about Rs 50,000 crore. Also, CBI has registered cases against the airline, launching a preliminary investigation. Meanwhile, a decision on the future of Air India is likely to be made within the next three months.

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Civil Aviation Minister Ashok Gajapathi has said that all options are open. This month India's finance minister Arun Jaitley had said the government should consider privatising Air India. (PTI)

Air India, under acute competition from more efficient, leaner and generally cheaper private airlines, is reeling with a debt of about Rs 50,000 crore. It has not made a profit for the last 10 years. 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. Meanwhile, Civil Aviation Ministry has reportedly said that a decision on the future of Air India is likely to be made within the next three months. The ministry has also reportedly said that even NITI Aayog has made recommendations for making Air India strong and viable and all courses of action are being examined.

Civil Aviation Minister Ashok Gajapathi Raju has said that all options are open when asked about comments this month from India’s finance minister Arun Jaitley, who said the government should consider privatising Air India, a Reuters report said. Air India has seen much of its market share disappear to fast-growing private local carriers and international airlines in the last decade. It has been surviving on a bail-out package spread over 10 years announced by the Manmohan Singh government in 2012 and has been working on ways to improve its financial position. In 2015-16, the airline posted an operational profit of Rs 105 crore on account of low fuel prices and increased passenger numbers.

Also read | Air India sell off: What has Arun Jaitley’s privatisation plan got to do with your children?

Minister of State for Civil Aviation Jayant Sinha told PTI, 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,” Sinha said. Asked about Air India and Indian Airlines merger that happened in 2007, which is seen as a reason for the problems of the national carrier, Raju had said that the clock cannot be put back on the deal.

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Meanwhile, the Central Bureau of Investigation (CBI) on Monday said that it had registered three cases against Air India and launched a preliminary investigation into ‘unknown’ officials at the civil aviation ministry. CBI had initiated the probe on the orders of Supreme Court in January. The civil aviation ministry has said that it will cooperate with a federal investigation into alleged irregularities in the purchase of 111 aircraft by the state-run carrier and into its merger with Indian Airlines, a Reuters report said. CBI has reportedly said that it deprived the national exchequer of funds when the financially stretched airline was bailed out later. All the cases relate to decisions and deals made under the previous Congress party government.

Also read | Air India Rs 70,000 crore scam case: CBI registers case against Civil Aviation Ministry official

Air India had purchased 111 aircraft for about Rs 7 hundred billion, 10 years ago, and the CBI said the deal was damaging, benefiting foreign plane makers while landing Air India with losses, PTI reported. The CBI is also investigating Air India’s decision to lease a large number of aircraft which it said was “without due consideration, proper route study and marketing or price strategy.”

Meanwhile, the question remains that even if there is a political consensus on the sale, will there be any buyer of an airline which is Rs 50,000 crore in debt? The Ministry has not revealed whether there is a chance of any foreign airline to pick up stake in Air India. Currently, according to FDI rules, a foreign airline can hold a 49 percent stake in a domestic airline. Some of the examples include Singapore Airlines-Tata Sons for Vistara and AirAsia Berhad for AirAsia India. , specifications and features

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