DNA Edit: Air India’s rebirth

Air India has been an albatross around the government’s neck, the weight of its debt aggravated by lack of proper management and poor work culture. Even when the aviation sector has been growing at a healthy clip, the state-run institution showed little signs of recovery.

The airline had become a classic example of why PSUs continue to bleed and put an unnecessary burden on the taxpayer. Now with Prime Minister Narendra Modi-led NDA government offering to sell 76 per cent stake to private bidders, the long-pending issue of privatisation will attain fruition.

The move entails offloading $5.1 billion of the airline’s cumulative debt of $7.8 billion. This divesting of stake will have several positive ramifications. Firstly, it will renew interest of private players in the domestic sector. Secondly, it will spur the government to tackle other unwieldy, loss-making PSUs in a similar manner. And, last but not the least, the money that is pumped into running the airline could be used for constructive purposes.

Air India, like most PSUs, was a Nehruvian dalliance with socialism that proved to be very costly in the long run. The erstwhile Congress governments are largely to be blamed for the sorry state of the airline. With no revenue plan or even a route-map for deploying the aircraft, Air India had gone on a shopping spree, adding 68 aircraft to the fleet.

The then Civil Aviation Minister Praful Patel presided over the destruction of the institution. His ruinous decision of merging Air India and Indian Airlines was the last nail in the coffin. Today, several international airlines have expressed interest in Air India. This means that with effective intervention, the airline can be brought back from the brink of total collapse. It’s just that the government has to step aside and give the buyers a free hand to conduct surgical operations.