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Aviation Ministry Not On-Board For Air India Sale, Favours Revival

The civil aviation ministry is still in favour of reviving debt-ridden Air India.

An Air India Ltd. aircraft passes over traffic as it prepares to land at Chhatrapati Shivaji International Airport in Mumbai. (Photographer: Dhiraj Singh/Bloomberg)
An Air India Ltd. aircraft passes over traffic as it prepares to land at Chhatrapati Shivaji International Airport in Mumbai. (Photographer: Dhiraj Singh/Bloomberg)

The civil aviation ministry has raised concerns over the plan to privatise Air India Ltd., a senior government official said requesting anonymity.

The ministry has concerns on how Air India’s debt will be restructured, on the voluntary retirement scheme and fleet management, the official said. The ministry is still in favour of reviving the debt-ridden national carrier, the official told reporters in New Delhi on Tuesday.

The talks to privatise Air India had reached an advanced stage but the proposal is being looked at afresh, the official said. Clarity on the sale would emerge in some time after the Union Cabinet takes up the proposal. The government is looking to offload a controlling stake after taking over a portion of its debt, the official said.

The government may also nudge public sector enterprises to buy some of Air India's non-core assets, he said.

Staying afloat on a little over Rs 30,000 crore bailout package extended by the previous United Progressive Alliance regime, Air India is saddled with nearly Rs 50,000-crore debt and is in discussions with lenders on ways to restructure loans. Since it merged Indian Airlines with itself, Air India has been in the red.

The bigger question is whether India needs a state-owned carrier, and if it does, whether the government can continue with the same structure or start a new company, the official quoted above said. These are just ideas that are being brainstormed, he added.

Another problem is attracting buyers for the airline, as domestic players do not have the appetite; and a sale to a foreign company will face a lot of opposition.

Jayant Sinha, Union minister of state for civil aviation, however, said on Tuesday that inter-ministerial consultations on the future of Air India have been completed, and the Cabinet would decide on the best move forward, wire agency PTI reported.

We are going through the analysis process. Those recommendations are with the Cabinet right now and it will take the process forward.
Jayant Sinha, Minister of State, Aviation

Emails sent to the finance and civil aviation ministries seeking confirmation and clarity did not elicit a response.

The civil aviation ministry had last month proposed privatisation of the national carrier based on a report by NITI Aayog. Sinha had earlier confirmed that the ministry is preparing a Cabinet note to decide on the future course of action for loss-making Air India, including possible privatisation.