Will Air India finally find someone other than the Government of India to fund it?

Air India for years has been one of India’s most glorious examples of a white elephant, not just because the airline operated Boeing-747 ‘Jumbo Jets’ painted in white. Much like other Public Sector Enterprises, the airline became a way for politicians and bureaucrats to repay favours with inflated leases and purchases of aircraft and services. And ever since the days of the Atal Bihari Vajpayee Government, the airline has been on the shop window and up for sale. Crippled by its own debt, Air India has found it impossible to not only turn a profit but also be competitive on a number of counts against domestic rivals such as IndiGo; on international routes Air India has been hollowed out by massive route rights allotted to Arabian airlines whose growth has been predicated on the Indian passenger. While Air India has played a major role in the repatriation of Indian citizens from foreign countries since the pandemic began (and many other evacuation exercises on occasions even earlier, especially when Sushma Swaraj was the Minister of External Affairs), the airline has made a pretty penny from it. And that will not substitute as a policy once the pandemic begins to wear off and air travel begins in earnest again. But the flag-carrier airline is not competitive domestically and while it might gain on international sectors with the rise of non-stop point-to-point travel, it faces risks from other Indian carriers such as IndiGo and Vistara. However, make no mistake, Air India is a powerful brand and one worth saving especially if the Government of India takes a major hit and absorbs much of the debt associated with the airline. After all, why would any sane person buy an asset where he is crippled by prior debt when it would be cheaper to create an all-new asset. If the undisclosed bidders for Air India give the Government a fair price for the airline and absorb some of the losses and most of the employees, it could well be a win-win for everyone. Sure, writing off thousands of crores of debt might be a hard pill to swallow but it is a lot better than continuing to absorb losses or shutting down the airline completely, losing an iconic Indian brand and thousands of jobs. There already have been in the past decade massive layoffs and many lives ruined largely owing to the failures of airlines like Kingfisher and Jet Airways, and tens of thousands of crores of public money has been lost in these private airlines as public sector banks have borne the brunt of bad loans to the aviation industry.

While the Government of India has not disclosed the identity of those who have expressed interest in bidding for the airline, it has been suspected that a group of employees of the airline along with a private equity firm Interups and Tata Sons are among the suitors. As the Maharaja goes under the hammer, sources in the Government have confirmed that it has received multiple expressions of interest. We still believe that selling Air India piecemeal might be a way for the Government to realise additional value from the airline but those in power believe that such a step will only delay and needlessly complicate the sale. We cannot understate the importance of the aviation industry for India and while the Railways have been the lifeblood of the Indian passenger transport system for decades, in a country the size of India, an affordable, reliable as well as a profitable aviation industry is vital not just for connecting people and enabling the economy but most importantly, it is one of strategic importance. A large civilian air fleet — much like a large civilian merchant fleet in centuries past — is a way to move military and other strategic assets quickly. Many have argued that this is why India should retain a public airline but many large nations, particularly the United States, do not have any airline controlled by the Government. In fact, a professionally run Air India which is profitable and not a taxpayer-subsidised operation that competes with true private airlines will lead to a level playing field and the overall growth of the Indian aviation sector. However, as the saying goes, there is often a slip between the cup and the lip and it remains to be seen whether the sale goes ahead.