Air India disinvestment has been mooted for long, particularly with Arun Shourie, Minister for Disinvestment in the Vajpayee cabinet vigorously pushing for it. Now the Narendra Modi government has invited expressions of interest to acquire 76% stake in the state-owned airline, once J.R.D. Tata’s pride and glory. Air India ran up losses of Rs 46,805 crore and outstanding debts of Rs 48,781 crore at the end of the last Financial Year. The rationale for privatization is sound. Consumer will gain from competition. The tax payers’ money will be better utilized. It is a welcome step as after the fall of the Vajpayee government, the idea has been shelved. Air India is evidently unable to withstand sectoral competition. Its current domestic market share is only a little over 17%. So the government has no reason to be interested in the national carrier. The same logic applies to BSNL and MTNL. There is perhaps some reason for keeping NTPC, CNGS, IOL, SBI, LIC and BHEL within the state-owned parameters. These organisations have met private competition fair and square. They continue to be profitable and pay dividends although the oil marketing companies are sustained by cross-subsidisation hurting the common man’s interest. Air India should be in the same league as Bhushan Steel, Binani Cement, Lanco Infratech or Alok Industries.
Air India has certain strong points apart from its Maharaja image. It has operating fleet of 138 aircrafts. It connects 54 domestic and 94 international destinations. It has prime landing / parking slots as well as brand equity. In efficient private entrepreneurial hands, it can recapture the slogan that there is An Air About India. But the old problem remains. Who will come forward to buy such a heavyweight in the air?
