Government ownership of Air India with no clear road map would lead the national carrier to “extreme insignificance and possibly closure”, aviation consultancy CAPA said today, amid the government deciding to put off the stake sale of the national carrier.
The government has decided not to go ahead with Air India divestment for now, a senior official said today, less than three weeks after the proposed strategic stake sale failed to attract any bidders.
CAPA South Asia CEO and Director Kapil Kaul said it was disappointing that the government has decided not to go ahead with Air India divestment.
“Continuing government ownership and with no clear road map will lead Air India to extreme insignificance and possibly closure,” he said in a statement.
Noting that funding large scale losses is grossly unfair to the taxpayer, he said there would never be a perfect timing for the stake sale “as conditions for divestment have to be structured by some bold decisions”.
He also said that the government should now focus on a comprehensive enterprise wide restructuring under a special administration to scale down losses significantly.
Consultancy Deloitte India’s Partner Peeyush Naidu said disinvestment of the nature of Air India does need time to navigate through the complex issues.
“Given the general elections next year, one can understand the practical considerations involved in this latest decision. However, it is important that management and the government continue to make progress on the longer term plan during this period as well,” he added.
Under the proposed plan, the government was to sell 76 per cent stake in Air India along with complete divestment of low-cost arm Air India Express and a 50 per cent stake in Air India SATS Airport Services Pvt Ltd — an equal joint venture with Singapore’s SATS.
In nearly two decades, Air India stake sale has not taken off twice. Back in 2001, during the then NDA government, the disinvestment process was scrapped.