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India’s government wants out of Air India business

India’s government wants out of Air India business

In a major development for India’s aviation and tourism sectors, Indian government has again come up with a proposal to completely get out of Air India and Air India Express (Air India’s ground handling arm) business.

The plan to give up 100 percent of airline stake  has come when the earlier 76 percent stake sale plan did not draw any takers.

The new plan also includes 2/3rd liability absorption by the government. Airline’s massive losses and liabilities have been a concern for a long time. H S Puri, the civil aviation minister, has said that the government is open to give further concessions. This shows that the government is keen to get out of the aviation business completely, as far as AI is concerned.

The land and building assets of the Maharaja carrier are not being put on the auction block.

The bidding limit for bidders has also been reduced to Rs 3500 crores, from earlier Rs 5000 crores, in the hope that more bidders may come. The earlier auctioning attempt had got poor response.

Things will get clearer by March 31 and Air India may have a new owner by mid-2020. But issues like what will finally happen to the existing staff are still to be sorted and may delay the process.

Air India has 146 planes, of which 83 are owned.

The opposition parties have opposed the latest bid, saying it is like selling family silver.