Mumbai: Air India has been making losses at the rate of Rs 20 crore per day and since 2009-10, the government (read taxpayers) have shelled out over Rs 1 lakh crore to keep the national carrier afloat. The Air India conundrum is one that successive governments have grappled with.
The formula often changed from finding a strategic partner, to a part stake sale to finally full privatisation. It is the Niti Aayog, a government think tank that proposed complete privatisation in 2017. Today Niti Aayog CEO Amitabh Kant says the successful privatisation of Air India has paved the way for other companies including HPCL, two public sector banks and a general insurance company.
“Air India has been the most complex transaction. If we have been able to succeed on Air India, then I think the other disinvestments will be far easier and we’ll see much more action in the coming months”, says Kant.
The challenges to find a buyer for the beleaguered airline have been several and the first attempt in 2017 to privatise it completely failed with no bidders willing to come forward.
The government then decided to use the enterprise value method so that the new owner would not be saddled with the Airline’s massive debt completely. Even so, Indigo Airlines stepped back from the deal in 2018 saying it wasn’t their cup of tea.
Finally, at Rs 18,000 cr the Tata’s have bagged the national carrier and will carry onboard about Rs 15,000 cr of debt. A key component to the successful bid was what would happen to the employees of Air India. The Tata’s will have to keep all 13,500 employees on for at least a year and the brand name as well.
The biggest challenge though will be to restore the battered image of the national carrier, one of a public sector company with shoddy service that prioritized the whims and fancies of government officials overpaying customers.
“Air India should give no favors to anyone and should be at arm’s length from the Government”, remarks Kant. ‘I am quite sure this is exactly what the Tata’s will do”, he says.
Watch Tamanna Inamdar in conversation with Niti Aayog CEO, Amitabh Kant