Taxpayer's albatross

Talks of privatising Air India could turn out to be hot air

Published 6 years ago on Jun 15, 2017 1 minute Read

Talks of the government considering, among other options, the privatisation of Air India, following think-tank Niti Aayog’s proposal, has been met with a amalgam of confusion and disbelief. With so many vested interests at stake, will the government really bite the bullet or more appropriately wash its hands off this lovingly nurtured national carrier? If you have been paying your taxes diligently, you have been an unwilling contributor to accumulated losses of Rs.50,000 crore and a debt of about Rs.55,000 crore. If you had any say in how your taxes were spent, you would have wanted to wash your hands off it years ago.

All this sloth, inefficiency and lack of accountability has seen Air India’s market share drop to 13% from a near monopoly 25 years ago. On their part, employee unions have expressed their ‘opposition’ and have written to the civil aviation minister to stop the privatisation. The moot point though is who will step up and buy Air India? Clearly, given the tattered balance sheet and the oversized workforce, the government might have to subsidise the buyer rather than receive any proceeds. One option that might make the airline attractive to possible bidders is if the government writes-off the accumulated losses and then ‘grants’ a concessionary interest rate on the debt till the airline turns around sustainably.

Needless to say, most private sector buyers would immediately asset-strip Air India to the degree they can to improve cash flow. Air India’s vast property holdings should really help. But here we are really getting into kite-flying. This intended privatisation will really test the government’s resolve to deal with vested interests. Aviation as it is has largely been a capital drainer and successful examples of airline privatisation are far and few. British Airways does come to mind. Ironically, state support has also nurtured a couple of great carriers — Singapore Airlines and Emirates. Here, too, the state has played an active role — that of an albatross around the taxpayer’s neck.