Air India revival: Tatas likely to take pilot seat on the ailing carrier

In what could be called a homecoming for Air India, the Tata Group is reportedly considering buying debt-ridden national carrier from the government in partnership with Singapore Airlines. Air India was founded by JRD Tata as Tata Airlines in 1932 which was nationalised in 1953.

Also read: FM hints at privatisation of Air India: Here are 5 other countries which sold their national carriers

ET Now today reported that Tata Group chairman N Chandrasekaran held informal talks with the government, expressing preliminary interest in buying a controlling stake in Air India with a 51 per cent equity holding. The government is happy with the Tata Group's interest in the heavily debt-laden carrier, the report said.

Meanwhile, another report in The Economic Times suggests that the Union Cabinet may clear the decks for stake sale in loss-making Air India this week.

Talks about privatising Air India have been going on for a month. It all started with an interview that Finance Minister Arun Jaitley gave to DD News where he said that if private airlines could handle 86 per cent passengers then they could also handle 100 per cent.

While Air India's market share is just around 14 per cent, its debt burden has piled up to reach Rs 50,000 crore. Of the total debt, Rs 20,000-25,000 crore is related to aircraft valuation.

Also read: Maharaja on Sale: Why would anyone buy debt-ridden Air India?

Days after Jaitley's comments, the National Institution for Transforming India or NITI Aayog also rooted for its disinvestment. But a few days later, Civil Aviation Minister P Ashok Gajapathi Raju admitted that finding a scapegoat - in the form of a strategic investor - might not be easy. And it was felt that even as the government machinery was pulling out all the stops to find a suitor, the sell-off could be tricky.

Is Disinvestment the Best Way Forward?

It is the third serious attempt by the Indian government to sell off Air India. In 1999, when Jaitley was the Disinvestment Minister in the Atal Bihari Vajpayee government, he came up with a similar proposal, but it did not materialise.

In fact, the repeated efforts by several governments to revive the airline had never yielded favourable results. That the airline could post operational profits of Rs 105 crore in 2015/16 was considered its biggest achievement during the past decade. But the euphoria did not last long.

The luxury of letting the government run the show at Air India - and burn taxpayers' money - is, indeed, over. It is now time to choose short-term pain for long-term gains.