Air India Privatization and its Future : Air India Privatization and Its future
Air India, country’s most colossal airline service provider has continuously remained on the peak of turmoil since 2017, from the day of announcement to entirely privatizing. The air line service which regulates a total of 4,400 domestic flights and 1800 flights was capable of earning an average of Rs. 60-65 crore per day with an yearly revenue of Rs.500 till 2019. However, an ambush by covid on the onset of 2020 seemed to turn the situation more catastrophic which eventually became fatal to grasp a strong base of survival.
Sailing of Air India
At present the all routes of Air India incurs a loss of Rs. 30-35 crore per day, which becomes impossible for the Government to divest with the amount of loss. Therefore, central Aviation minister Mr. Hardip Singh Puri has promulgated a 100% sailing of Air India along with its low cost Subsidiary Air India Express and ground handling unit AISATS.
Aviation Minister final Anticipation
Albeit, the same promulgation did exist onwards from 2018 right after approving the EOI (Expression Of Interest) which laid upon a different norm. Focusing on 76% control by the government earned to control entire equity and share and lease the rest i.e. managerial body to be privately monitored. However, due to lack of interest from bidders on the policy and talon of covid 19 on the airline’s yearly revenue pushed the government to show incapability of affording the loss. Hence, Hardip Singh Puri anticipates to complete the finishing process by September this year. To cope with another Rs. 60,000 crore loss, he said a few days ago.
A chronological history of Air India at a glance to understand the privatisation process
Before stepping into the major discourse of Air India privatization and intricate pros and cons, let’s take a quick and terse round trip throughout the history and origin of this air lines.
- Air india was first established in 1932 by J R D Tata of Tata Airlines
- In 1946 it was successfully held to be led by the government. With a stake of 48% along with additional 2% till 1948 acquired by the government.
- In 1953, govt. had nationalised the carrier that passed by Air corporation act 1953, which helped numerous monopoly rights and benefits to this air lines that eventually marked the airline to propel robust and single-hand effect over the whole country.
- First initiation of the air lines had taken in 2001 as it had already been triggered by bugly loss.
- However in 2007 merging Air India with India Airlines had finally been undertaken with due permission of NACIL (National Aviation Company of India Limited) with an imperative to mark down overall administrative and aviation costs.
- Till 2007 after merging with Indian Airlines the combined loss was 7.7 billion which had been exponentially triggered to 72 billion by 2009. By the end of 2011 the amount of loss was 426 billion along with a divestment amount of 429 billion seeked from the government.
- In 2013 then central aviation minister Arijit Singh re-seeked for Air India’s privation for impossibly being inept to manage the divestment amount.
- By the end of April-June 2016 Air India reported a loss of 246.16 crore which summoned to 48877cr March 2017, that drove the govt. finally set on it’s selling and privatisation due to nexus loss and failure to compete with private jet agencies.
- However with the stake of 76% and partial share of bids till 2018-19, the airlines witnessed a lack of response.
- And on the onset of covid as soon as the loss amount took the shape of skyrocket, in January 2020, a full and 100% stakes and share was announced. And the sailing phase would be winding up by this year’s September-October, as has been anticipated.
However, on the latest (May 2021) promulgation from central government on Air India saling latest update, numerous queries geared up coiling both the future of indian airlines, employee’s job security and impact of public sector, shares and vice versa. All of these have been put down into a marshalled manner.
1. Future prospect of Indian Airlines (Air India Privatization and Its future)
Being the bulwark of Indian airlines, confusion on the future prospect is naturally the first thing to be triggered out. However, IATA (International Air Transport Association) anticipates a better future on Indian airlines on the decision. As per the CEO of IATA, Alexandre de Junaic the new AI divestment policy has the potential to be highly competitive in the coming future which will be positive for the country’s economic landscape.
2. Job security (Air India Privatization and Its future)
Being the feeder of 10,000 employees including staff, engineers and lower grade workers, a serious query on the future of all employees has already been marked after confirming the news of privatisation. However, a special request has been made by the government to all the bidders to provide job security to all Air India workers for next 1 year, drafted through a Request for Proposal (REP). The notice resembles all PSUs. banks which recently have been privatized as well.
3. Impact on public sector
Being a massive body, Air India has breaded numerous stakes, public stocks and shares based on it’s huge yearly revenue. However, even being privatized it seems to imply no negative impact factor on all active shares and the economy market. Rather the situation could alleviate to some extent, estimated by experts.
Hence, on the great news of Air India privatization, the overall economic trend of the country is awaiting for a great push and so as the degrading revenue. The change would work as an iflux to both pros and cons which would be more clear with time.