‘Well, Actually, We’ll Keep Air India’ Says Government Less Than Three Weeks After Strategic Sale Failed To Attract Bidders

“The airline is posting operational profits. None of the flights go empty. With all the cost efficient mechanism in place, we will continue improving its operational efficiency. There is no need to rush in for disinvestment as of now,” a government official told PTI in context of divesting Air India, according to this report in the Hindu Business Line. In other words, the Air India disinvestment has been put on hold. According to some reports in the electronic media, the sale could be deferred to as late after the 2019 Lok Sabha elections.

The decision to defer the sale was taken at a high level meeting convened by Union Minister Arun Jaitley on 18 June. In attendance were Piyush Goyal, who his holding temporary charge of the Union Finance Ministry; Minister for Civil Aviation Suresh Prabhu; Minister for Road Transport and Highways, Nitin Gadkari; and senior officials of finance and civil aviation ministries.

As the same report in the Business Line points out, this decision comes less than three weeks after the proposed strategic sale of 76 per cent stake of Air India failed to attract bidders.

While the success or failure of the Union government’s disinvestment initiatives cannot be judged on the status of the Air India stake sale alone, it is by far the most high profile part of the project. Moreover, as this decision comes only around twenty days after the strategic sale initiative fell flat, the government would have to battle perception that the decision to defer the disinvestment is a ploy to cover up for the embarrassment caused by failure to attract bids for Air India.