The Govt has invited expressions of interest for Air India again. Will it succeed this time in selling off the airline?

What’s next for Air India? Even with Ministers in the Government trying to talk up the sale — Commerce and Industry Minister Piyush Goyal said he would have bought the airline if he weren’t a Minister — the fact is that this sell-off is difficult. This time it will not be — thanks to the quality or the lack of it — the asset on sale alone. In a revised push, the Government has made it clear that it plans to sell its entire stake in the carrier. But the sell-off process by the Modi Government during both its terms has been sporadic and questionable. Take its failure to sell off Can Fin Homes, the housing finance arm of Canara Bank. Without any reason to put it on sale, it has been more damaging to the investor community than any of the protests at Shaheen Bagh or resolutions by the European Parliament. Foreign investors are genuinely worried whether India is open to doing business at all. The Government’s negativity has been on display, including that of Goyal’s recent statement against Amazon’s billion-dollar investment/bailout to its Indian operations. Air India is no ordinary public sector unit (PSU); it is the national airline after all. Talk of its disinvestment have flamed passionate arguments on both sides. On the one hand, some feel that it remains a vital national asset and that the Government must plough in more taxpayers’ funds to keep it aloft. On the other, there are those who feel that it is a five-tonne deadweight attached to India’s leg and must be divested immediately or better still, shut shop. Air India may be tottering at the edge of the precipice but it still has strengths that can be advantageous in the long run. Whoever rescues it stands to gain for it has some of the prized international slots in profitable routes, a decent fleet and has a well-developed domestic and international footprint. It has some leftover glow from being a superbrand at one time and has skilled and experienced staff, particularly on operations and engineering sides, who are also being sought by most private operators. 

With the disinvestment process in a limbo and the Government failing to even make what one could best describe as “easy sells”, the question about selling Air India should be put on hold. Simply because selling the national carrier is extremely complex and involves a layered process with terms and conditions. At the same time, despite Jet Airways’ collapse actually providing a slight fillip to the rest of the industry, the Indian aviation industry has been hurt due to a multitude of reasons, many not of its own making. IndiGo, India’s largest airline, is suffering due to engine issues. SpiceJet, owned by Government-linked entrepreneur Ajay Singh, is faced with a cash crunch, which is not being helped by several of its Boeing 737 Max aircraft grounded. So, the question about who has the money as well as the expertise to buy Air India is open, one that does not have easy answers. The same issues that arose when Jet Airways was going down in flames have re-emerged now. It would be easier and cheaper to establish a new airline than sink hundreds of millions of dollars into Air India unless one really values the slots. At the same time, during the weekend, it emerged that Dubai-based Emirates carried over 50 million Indians to Dubai and beyond, a classic case of how Indian passengers have fuelled the growth of global airlines. There is no doubt that India offers rich pickings for global airlines and could one day become a key driver of the aviation economy. We are poised to be the third largest player in this sector by 2025.