Air India privatisation

Indian government decided to privatise Air India

Modi government has decided to sell entire shares and stake in national carrier Air India. The Indian national carrier is struggling with rising debt and increased losses. The airline even finds it difficult to pay salaries and to buy fuel.  It faces bleak future. 

The Air India trade union is opposing the privatisation of national airline. The union has called the meeting to discuss the future course of action. The Union fears that private buyers will sack permanent staff and lower the wages. They fear job losses and attacks on the working conditions and facilities. 

The airline, which owes more than US$8 billion, has been struggling to pay salaries and buy fuel, with officials recently warning it would have to shut down unless a buyer was found. The Indian aviation minister Hardeep Singh Puri had said the airline would “have to close down if it is not privatised”.

On Monday the civil aviation ministry released a document inviting bids for a 100 per cent stake, setting March 17 as the deadline for initial submissions. Potential buyers would have to assume around US$3.26 billion in debt, the document shows. The previous efforts to sell the airline were failed as no bidder showed interest.

Air India was founded in 1932 and once known as “Maharaja of the skies”. The Air India lost market to private low cost carriers as its monopoly ended. India is one of the fastest growing aviation markets but at the same time it is also the most competitive market. The Indian aviation market has been in slump since the collapse and bankruptcy of Jet Airways last year.    

The government in 2018 tried to sell 76 per cent of Air India and offload about US$5.1 billion of its debt.

It was generally believed that Tata Group might be the potential buyer-but it decided not to bid after deeming the terms too onerous. The airline has more than 13,000 permanent employees and fixed-term contract staff, including more than 1,850 pilots and 4,600 cabin crew.

A successful bidder would win control of the airline’s 4,400 domestic landing and parking slots and 1,800 international slots at Indian airports, as well as 900 slots at airports overseas.

While several of Air India’s subsidiaries will be excluded from the sale, the buyer will get 100 per cent of low-cost arm Air India Express and 50 per cent of AISATS, which provides cargo and ground handling services at major Indian airports, the bid document showed.

                                                     Business correspondent