On June 28, India’s finance minister, Arun Jaitley announced that the cabinet has agreed “in principle” to the disinvestment of Air India.
The biggest challenge for the government though, is to make the debt-laden national carrier attractive to bidders. Air India has an accumulated debt of over ₹50,000 crore. The aviation ministry has proposed selling off part of the national carrier’s assets to reduce its debt, before putting it up for sale.
The plan is to invite around five bidders for the auction of the airline. The government is still divided on how much of the airline must be disinvested. There are talks that if 51 per cent of Air India is sold to a private player, should the airline’s fate turn towards profits, the government will be able to benefit from it. But this is just a speculation.
The Jaitley-headed Ministerial body is openly hopeful that Tata Group will come to Air India’s rescue. In 2000, Tata and Singapore Airlines (SA) had made a joint bid for 40 per cent disinvestment of Air India, but it fell through last minute in 2001 due to political disagreements. This time again, unnamed sources say there could be some interest in the airline by Tata.
Air India was formed by JRD Tata in 1932 when it was known as Tata Airlines. In 1946 it became a public limited company under the name of Air India.