The ‘Maharajah’ of Indian civil aviation sector -Air India- is all set to be disinvested in the coming days. Air India is the flag carrier airline of India and is owned by Air India Limited, a Government-owned enterprise. Air India is the third largest domestic airline in India in terms of passengers carried, with a 17% share of traffic on routes linking India to international destinations and 13% of the domestic market. Air India’s mascot is the ‘Maharajah’(Emperor) and the logo consists of a flying swan with the wheel of Konark inside it. Recently, NITI Aayog has submitted a draft plan to union cabinet on privatisation of Air India and the union cabinet has given an in-principle approval for strategic sale in Air India. This article tries to throw light on timeline, need and way forward towards disinvestment in Air India.

Timeline – The Government of India has been running Air India since year 1953, although it was founded as a unit of Tata Sons Ltd in year 1932. Its name was changed to Air India in 1946. After India’s independence, the government acquired a 49% stake in the airline. In 1953, Government of India passed the Air Corporations Act and nationalisation of Air India was done. Air India operated on international routes where as Indian Airlines operated on domestic routes. The decades of 1970’s, 1980’s and even the early 1990’s can be considered as Air India’s golden years in terms of its profits and functioning. The downfall of Air India started in the mid-1990’s, as private airlines took their first fledgling steps, but accelerated in the 2000’s. An ill-advised merger of Air India and Indian Airlines in the year 2007 further complicated the problem. Over the past two decades, the government of the day had made several efforts to revive the airline, but to no avail. There had been one serious attempt over the past three decades in privatising the airline – under the previous National Democratic Alliance (NDA) government in year 2000-01. A mix of political tentativeness, bureaucratic red tape, and smart lobbying by domestic airlines rivals resulted into stalling the process of privatisation of ‘the Maharajah’. After the unsuccessful attempt to divest in Air India during NDA-I regime, the present day Modi Government has decided to disinvest in Air India once again, in year 2017.

Reasons –  NITI Aayog, the government think tank, had cited Air India’s ‘fragile finances’ as the main reason for recommending the airline’s disinvestment. The face off to the competition due to privatisation in civil aviation sector post- LPG era in India, political interference, bureaucratic red tapism in its functioning, corruption, along with ill-advised merger of Air India and Indian airlines has lead to the downfall of Air India. The airline has a debt of more than Rs 52,000 crore and is surviving on a Rs 30,000-crore bailout package extended by the previous UPA government in year 2012.Therefore, The Cabinet Committee on Economic Affairs (CCEA), on June 28, gave an    in-principle nod for the strategic disinvestment of Air India and its five subsidiaries so as to decline further financial support to an unviable non-priority company in a matured and competitive aviation sector.

Way Forward – The global trends suggest that Asia, especially India and China, is expected to drive the growth of the global aviation business over the next 20 years. The interested parties for strategic disinvestment in India include IndiGo, Tata Group and a few foreign aviation players. The decision about the modality, amount and the bidders for disinvestment in Air India, must be based on the present and future realities of Air India functioning as well as its futuristic prospects. Privatisation is not the panacea for all the ills of Government of India. It is the weighing of different options and choosing the best alternative suited to the Indian socioeconomic scenario with aim on overall development of the nation- should be the criteria for any decision. We hope that this time we would not miss this opportunity to distress ourselves from the burden of maintaining the white elephant- the Air India and the revenue earned through disinvestment would be constructively utilised in social sectors including health and education.

(The author of this article ,Lt Col (Dr) Satish Dhage, is an ex Army officer and has been qualified for IPS (Indian Police Services) through IPS LCE 2012. Presently, he is Director, MGM Institute of Competitive Exams Aurangabad.                                     For any queries or feedback, he can be contacted on email id : drsatishdhage@gmail.com)