Government Gives Up On Air India Revival

By Shakir Husain Shakir Husain, BERNAMA’s correspondent in India shares his take on the New Delhi capital city and its unique social narrative. NEW DELHI, July 3 (Bernama) -- It seems India has given up on loss-making Air India staging a turnaround. The government on June 28 approved plans to privatise the national carrier as it seeks to exit a business in which it is unable to make money. Air India is bleeding cash and faces tough competition on both domestic and international routes. For many years, people in the aviation industry have jokingly called Emirates as the "national airline of India" due to the Dubai-based carrier's domination of India's international traffic. Airlines such as Qatar Airways and Etihad Airways, which has an alliance with India's Jet Airways through a significant shareholding, have also grown their share of Indian passengers flying foreign routes. IndiGo dominates the domestic market with a 40 per cent share while budget airlines SpiceJet and AirAsia India are on a growth path. From being the country's largest carrier, Air India, known as the Maharaja (great king) of the skies, has seen its domestic share decline to just 13 per cent. It must be made clear, however, that Air India remains a formidable player in the Indian aviation sector, and the government's decision to offload the debt-laden airline looks based on its unwillingness to pour more money into the company without being certain about its financial viability. "I think really where Air India stands now, it is almost a matter of existence," Arvind Panagariya, vice chairman of the government think-tank Niti Aayog, said recently. He said Air India's debt is already 520 billion rupees (about US$8 billion) and about $618 million of debt is being added every year "so this is simply not sustainable." The airline received a $5.8 billion lifeline from the previous government in 2012. So, who may buy a loss-making airline with a growing debt pile? There are a couple of interesting probable suitors at present. One idea is get India's biggest business group Tata Sons to take back the airline. It was started by Jehangir Ratanji Dadabhoy (commonly known as JRD) Tata, considered the father of Indian aviation, as Tata Airlines in 1932. It was renamed Air India in 1946 and became a nationalised company in 1953. Today Tata Group is a partner in two carriers - budget airline AirAsia India and full-service airline Vistara. Tata Group has not said whether it would bid for Air India, but IndiGo has expressed an interest in acquiring the national carrier. Air India has 140 planes in its fleet comprising Boeing 777s, Boeing 747s, Boeing 787 Dreamliners and narrow-body Airbus planes. IndiGo president Aditya Ghosh said last week his 11-year-old airline, which operates a fleet of 135 single-aisle aircraft and has 450 planes on order, is particularly interested in Air India's international business. "Alternatively, we are equally interested in acquiring all of the airline operations of Air India and Air India Express (low-cost unit)," Ghosh said in the letter to the Ministry of Civil Aviation. More potential buyers may come forward once the government discloses details of its disinvestment plans. As of now the government has only given an "in principle" approval for considering strategic disinvestment of Air India and five of its subsidiaries. -- BERNAMA