Mubasher: India’s government has approved “in principle” a decision to sell a stake in the state-owned company Air India, which failed to catch up with its low-cost rivals in the airline market.
The Indian cabinet has decided to approve the disinvestment in the company, finance minister, Arun Jaitley said, noting that he will lead the team responsible for the sale process.
The company’s debt piled up, logging nearly $9 billion.
Owing to its poor services, delayed and cancelled flights, passengers have shifted to new low-cost carriers, prompt state-owned Air India to lose its market monopoly.
The Indian government has floated many proposals in the past to privatise Air India but none were successful.
In 2012, the state-owned Indian carrier received a bailout package worth $5.8 billion from the government. The company, however, incurred losses for nearly a decade before turning a profit in 2016.
“Air India’s privatisation has been long overdue,” Amber Dubey, partner and India head of aerospace and defense at global consultancy KPMG, told AFP, adding that “Every year’s delay has only cost taxpayers money and eroded Air India’s market value.”
The Indian Cabinet said in a statement that any group that will be tasked with progressing the sale must bear in mind Air India’s “unsustainable debt” and “how much to sell-off and potential bidders for the airline,” according to AFP.
In January, Air India came in third place on the list of the companies dominating the market with a 12.8% market share, behind IndiGo, which had a 42% market share and SpiceJet.
Air India, which is currently competing in the world’s fastest growing market, was nationalised after its native country’s independence almost 70 years ago.
