Finance Minister Arun Jaitley today said the Union Cabinet has given in-principle approval for disinvestment of Air India. Last week, union minister Jayant Sinha informed that inter-ministerial consultations on the future course of action for Air India had been completed and the Cabinet would decide on how best to move forward.
Staying afloat on little over Rs 30,000 crore bailout package extended by the previous UPA regime, Air India is working on ways to improve its financial position amid stiff competition. The Civil Aviation Ministry is already looking into the recommendations made by NITI Aayog for the national carriers revival.
Talks about privatising Air India have been going on for a month. It all started with an interview that Finance Minister Arun Jaitley gave to DD News where he said that if private airlines could handle 86 per cent passengers then they could also handle 100 per cent.
While Air India's market share is just around 14 per cent, its debt burden has piled up to reach Rs 50,000 crore. Of the total debt, Rs 20,000-25,000 crore is related to aircraft valuation.
Days after Jaitley's comments, the National Institution for Transforming India or NITI Aayog also rooted for its disinvestment. But a few days later, Civil Aviation Minister P Ashok Gajapathi Raju admitted that finding a scapegoat - in the form of a strategic investor - might not be easy. And it was felt that even as the government machinery was pulling out all the stops to find a suitor, the sell-off could be tricky.
However, last week it was reported that Tata Group was considering buying debt-ridden national carrier from the government in partnership with Singapore Airlines. Air India was founded by JRD Tata as Tata Airlines in 1932 which was nationalised in 1953.
It is the third serious attempt by the Indian government to sell off Air India. In 1999, when Jaitley was the Disinvestment Minister in the Atal Bihari Vajpayee government, he came up with a similar proposal, but it did not materialise.(With inputs from PTI)