The government has said that it will privatise Air India, often referred to as “the Maharaja” after its turbaned mascot.
The cabinet last night took the first step in offloading the airline with an “in-principle” approval for the sale of a stake in Air India, which is bogged down by $8 billion or 52,000 crores in debt.
It is unclear if the government will write off any part of the debt. Finance Minister Arun Jaitley is to head a committee to decide the size of the stake to be sold and how Air India’s assets and debts will be handled.
The cabinet approval last night, the first of a series of steps needed before Air India can be sold, signals Prime Minister Narendra Modi’s determination to fend off union opposition and sell an asset some economists have long argued should be in private hands.
Once India’s biggest airline, Air India’s market share in the booming domestic market has slumped to 13 per cent as private carriers such as IndiGo, owned by InterGlobe Aviation, SpiceJet and Jet Airways expanded.
The carrier was bailed out in 2012 with $5.8 billion or 37,430 crores of government funding.
Media reports have speculated that Tata Group could buy a stake in Air India, which it owned before the carrier was nationalised nearly 70 years ago. Tata is yet to comment.