Maintaining that the government has learned its lessons from previous disinvestment attempts, Hardeep Puri informed members of Indian parliament on Thursday, that interested Indian companies should see this offer as a golden business opportunity, and added that the government has the mechanism to ensure that the disinvestment of Air India takes place as soon as possible.
Puri further said that while personally, he would like to see Air India entirely sold off to an interested private party, the final decision will be taken by a ministerial panel.
Later, in an interview for The Times of India (TOI), the minister described Air India as a “first-class asset with a good safety record, engineering, routes and a strong brand.”
Emphasizing that India’s aviation sector is healthy, aircraft fuel prices are moderate, and exchange rates are stable, Puri said the asset vacuum created by the exit of private airliner Jet Airways due to financial woes, provides an ideal opportunity for an Indian company to change the fortune of Air India, and bring it out of the red.
Aviation expert Harsh Vardhan, who was associated with Air India in the early 1980s and played a significant role in its turnaround then, had a different take on the performance of India's aviation sector.
He suggested two key reasons as to why Indian airline operators are failing and shutting down operations.
He told Sputnik, “One is market share because they are going for unprecedented growth. They keep adding capacity and prices are unable to reach viable levels. The second is that when some stability takes place, more capacity is injected into the market.”
He further said, “As with any industry, aviation is cost-driven. Fuel plays a very important role. Fuel prices in India are the highest. In fact, when prices go down in most countries, they build up a cushion, but the Government of India has been profiteering, at the cost of Indian consumers and airline operators.”
“This is the reason for the high-cost environment and non-viability of the airline industry in India,” he said.
Vardhan explained that the Indian aviation industry is also at fault for focusing on growth, rather than on balance, stabilization, or rationalization.
“Only those who have the sustaining power can survive,” he concluded.
Netizens did not appear too enthused about the government’s plans for the disinvestment of Air India.
Govt has no business to do business, yet Modi Govt still bails out incompetent & corrupt PSUs - 70K crore for banks,72K for BSNL MTNL 30K crore for Air India. While penalizing successful private sector. Incapable of doing real disinvestment & funding rural infra. Haathi ke Daant— गीतिका (@ggiittiikkaa) July 6, 2019
From the article> 'The loss-making Air India is estimated to have a debt burden of over Rs 48,000 crore and the government's efforts for strategic disinvestment of the carrier failed in May last year.'— Name (@lassi___samosa) July 11, 2019
Currently, Air India has a fleet of 172 aircraft, including 87 which are owned and 85 that are leased. The total number of Indian carriers is around 580.