Air India to be privatized soon.


The government will soon be inviting the bids to sell its entire stake in Air India. The document is expected to come out before the end of the month. 100% stakes of the airlines will be sold. A clearance from the ministerial panel is pending before it is made public. A sale of Air India is key for the Union government to meet its ambitious disinvestment target of INR 1.05 trillion for the year to March 31. Meeting the target is crucial to avoid the corporate tax rate cut which will lead to a revenue loss of INR 1.45 trillion. Debt-laden Air India has been surviving on an INR 30,000-crore government bailout and has ceded market share to private airlines such as IndiGo and SpiceJet. 

The ministerial panel headed by Amit Shah, first met on 19th September to look for the options. They will again meet soon to declare the final privatization of Air India. the first stake selling in March 2018 failed because the government had a 24% stake in the airlines at that time. In addition to that Air India has a debt of more than INR 33,000 crore which was a burden in itself. 

To reduce the burden, the government has established Air India Assets Holding Ltd (AIAHL) in February to ensure that a part of the airline’s debt will not be backed by any asset. Out of the four subsidiaries of the airlines, only Air India Air Transport has been transferred to AIAHL. the net debt of Air India has increased from INR 55,000 crore to INR 58,351 crore. The sale of the airline will free the government from a loss-making business. 

Presently, full foreign ownership is allowed in an Indian airline, although foreign airlines cannot own more than 49% stake in a local carrier.