India Decides to Sell Its State-Owned Airline

The Narendra Modi government has given an in-principle approval for selling its stake in the state-owned airline Air India. A group of ministers will decide upon the modalities of divestment in the 70-year-old airline which is $8 billion in debt.

New Delhi (Sputnik) – Air India has 14% share in the domestic market where cutthroat competition from private airlines like Indigo and Spicejet is hurting its profitability. At the same time, Air India is witnessing growth at about 17 % a year on international routes.

“[A group of ministers] will now take a decision on the quantum of stake sale and take a call on Air India’s assets, debts and its hotel subsidiary,” Indian Finance Minister Arun Jaitley said on Wednesday.

The group of ministers will recommend how to treat the unsustainable debt, the hive-off of certain assets to a shell company, the quantum of disinvestment and about bidders.

Air India was founded by industrialist J.R.D. Tata in 1932 as Tata Airlines and was later nationalized in 1953. It has a golden past and was the first airline in the world to have an entire fleet of jets. The Indian government has been using the airlines to rescue Indians stranded in conflict zones abroad, airlifting around 170,000 people out of Kuwait in 1990 and rescuing citizens of 23 countries from Yemen in 2015.

The Indian government has made several attempts to sell its stake in Air India. In 2001, when the Atal Behari Vajpayee government was ready to sell it to Tata Group and Singapore Airlines, Singapore Airlines backed out at the last minute.