NITI Aayog Proposes Total Privatization Of Air India

The government may look at exiting Air India completely, as the Niti Aayog has proposed total privatisation of the national carrier in a report to the Prime Minister’s Office. 

To stress its point, the Aayog has cited various international examples of governments selling their entire stakes in airlines and not retaining any shareholding to make them viable. These include British Airways, Japan Airlines and Austrian Air. 

Aviation minister Ashok Gajapathi Raju said the government is examining the suggestions made by the think tank. 

“Niti Aayog has made suggestions to make Air India a strong and viable airline. All course of action is being examined by us. We have not closed any option,” he told reporters at a conference held here on the third anniversary of the BJP-led government. 

Raju was responding to a question on a recent statement made by union finance minister Arun Jaitley, who hinted at a divestment in Air India. Jaitley told state-owned TV news channel Doordarshan that the government is exploring all options with regard to Air India, including bringing in a strategic investor. Sources in the aviation ministry said the government expects to make a decision on the future of Air India within three months. 

The Narendra Modi government has already started discussions on a plan to divest stake in the carrier, which is surviving on a Rs 30,231-crore nine-year bailout programme originally approved by the previous Manmohan Singhgovernment in 2012. 

Air India, which has accumulated losses of over Rs 50,000 crore, is sitting also on about Rs 55,000 crore of debt — aboutRs 22,000 crore of loans taken to finance aircraft purchase and the rest for working capital. 

The airline has an annual interest outgo of Rs 4,500 crore, which accounts for about 21 per cent of total turnover. The aviation ministry believes that the merger of erstwhile Air India and Indian Airlines — which operated international and domestic flights, respectively — had defied all logic. “I have always said this that the merger of the two airlines does not make economic logic,” Raju said. 

“Any merger should have strategic, financial and operational logic. While the financial logic is being investigated, strategic and operation logic has been difficult to achieve,” Jayant Sinha, the minister of state for aviation, told reporters. 

The government’s thinking towards divesting the national carrier coincides with the Central Bureau of Investigation on Monday registering FIRs against unnamed officials of the civil aviation ministry and private individuals for alleged irregularities in the UPA government's purchase of 111 aircraft for Air India and Indian Airlines at a cost of Rs 70,000 crore. 

The probe also covers the leasing of a large number of aircraft by the airline without due consideration, and surrendering of the debtridden carrier's profit-making routes and schedules to benefit private players.