DNA Edit: Govt idea of finding bidders for Air India falls flat

Employee unions in Air India and allied services have celebrated no show of bidders for the government-run Air India, its low cost arm Air India Express and Air India SATS Airport Services. The government wants to offload 76 per cent equity share capital and transfer management control to a private player. The deadline seeking bids was extended twice, and yet, no one has come forward to buy what has now become the proverbial white elephant for the government. 

There was a time when Air India’s monopoly in India’s commercial airspace was common knowledge. But that era was over after the economy opened up in the 90s. The airline has lived much beyond its life and there is indeed no reason why it should be propped up with the taxpayers’ money. Aviation is a not an essential business where the government must remain present to keep private players in check. It’s the job of a regulatory authority and, if the government so desires, it can empower such an authority. Cumulative losses of Air India have risen to over Rs 46,800 crore. 

The airline is struggling to keep itself in air as much of its revenue is going towards interest payment. Its market share has dwindled over a period of time with low cost players competing in a dog-eat-dog scenario. As much as 40 per cent of the total workforce of 27,000 is permanent, which causes a huge burden in itself. Bidders must also take responsibility of debts of over Rs 33,000 crore as they take over the airline. With the airline being in such dire straits, no one will want to even touch it. But this is not the end of the story. 

The fact that the government wants to sell off only 76 per cent and keep 24 per cent, means that the airline will remain open to interference. And it is precisely this interference that has led to the downfall of Air India. Stories of how a civil aviation minister’s daughter made the authorities cancel a flight and seek a bigger plane to ensure the family travelled business class, even if seats remained empty in economy, have been well documented. What guarantees a private player then, who takes over Air India, that such arm-twisting won’t happen? Rashtriya Swayamsevak Sangh, which remains ruling Bharatiya Janata Party’s guiding light, has cautioned the government on the sale and the RSS chief Mohan Bhagwat has opined that the government must not sell more than 49 per cent stakes and the buyer must be an Indian firm. 

However, when most of the players in Indian skies themselves have joint ventures or just about surviving, Bhagwat’s advice seems impractical. What’s more, it may have warded off potential suitors from international carriers. Rising crude prices, which will in effect lead to higher fuel prices, and therefore, higher operational costs are going to hurt the government’s cause further. The government must now review its sale conditions in entirety or else the plans to divest will vanish in thin air.