New Delhi: Civil aviation minister Ashok Gajapathi Raju indicated on Thursday that the government could consider the option of disinvestment in Air India to pull the national carrier out of its financial troubles. The government owns Air India. When asked whether the option of disinvestment in Air India could be considered, Mr Raju told a TV channel he hopes the government considers the option. The government can retain control of Air India even if it goes in for disinvestment. But significantly, when asked if the outright privatisation of Air India can also be considered, Mr Raju said he was not in favour of “closing any option”, thereby indicating this option too could be considered.
The civil aviation minister also indicated the financial restructuring and turnaround plan of the airline would not be enough to turn Air India around due to the deep financial “legacy” issues that stemmed from factors such as purchase of scores of planes more than a decade ago as well as the merger of Air India and Indian Airlines around a decade ago. Mr Raju said many decisions were taken for Air India years ago that were devoid of any economic logic.
The minister’s statements indicate a rethink within the government on what it should do about the national airline. The earlier UPA government had embarked on a policy of granting Rs 30,000 crores to Air India over a period of 10 years and the policy of financial support has been continued by the NDA government.
Cash-strapped Air India, which has incurred losses of thousands of crores due to these “legacy” issues arising from loans and other factors, has nevertheless recently improved its performance on the operational front. But it is clear to the government that the airline will continue to operate only if it is backed financially with state funds.
Mr Raju indicated as much when he hinted it cannot be “business as usual” for Air India in the current situation. Interestingly, the NDA government had earlier been publicly denying that it plans to privatise Air India or carry out any disinvestment in the national airline.