The swift government clarification that the divestment of Air India remains on the cards, contrary to Civil Aviation Minister Hardeep Singh Puri’s statement in Parliament that suggested its sale would be deferred in the face of high crude oil prices and volatile foreign exchange rates, signals the Centre’s intent to plug the drain on its resources that the loss-making airline has long and sadly been.

The Maharaja, the flag carrier’s mascot, is virtually pauperized, and is creaking under a 58,000-crore mountain of debt. The carrier remains airborne only artificially, courtesy periodic infusions of cash by the government. However, given India’s perennial budgetary constraints, the Centre cannot afford to throw good public money after bad endlessly. Also, putting on hold the airline’s privatization due to high international crude prices and currency fluctuations would be a lame excuse, since neither oil prices nor currency rates are likely to stabilize in the foreseeable future.

If the government relieves prospective buyers of onerous conditions on them, it may actually find bidders, unlike its last attempt to sell Air India. Back then, it wanted to offload only 76% of the airline’s equity while retaining the rest, and also forbade the successful suitor from paring its share for three years. The government is now reportedly amenable to selling the entire stake, and might also shed its reservations over the bidder going in for a stake sale immediately after acquiring the airline. This should, hopefully, excite fresh interest in the airline, which has prime landing slots at top airports across the world, a 26% international market share among Indian carriers, aircraft repair workshops, and valuable real estate in cities such as Mumbai, London and New York. With its high debt burden and accounts dripping with red ink, Air India would find it difficult to raise fresh loans. A successful bidder would need the flexibility to raise capital by selling shares and also restructure the business for operational and cost efficiencies. It’s time for the government to sweeten the deal and turn the Maharaja over to another owner.

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