Union Cabinet gives in-principle nod for Air India disinvestment

Arun Jaitley to head group to decide upon the modalities of the ailing airline’s stake sale

The plan to privatise Air India was first mooted by the NDA government in 2000

The Union Cabinet on Wednesday gave its approval, in-principle, for divesting stakes in national airline Air India.

“The Cabinet gave its in-principle approval for Air India disinvestment,” Finance Minister Arun Jaitley said in a press briefing on Wednesday.

A group under Mr. Jaitley has been formed to decide upon the modalities of Air India’s stake sale. “It will now take a decision on the quantum of stake sale and take a call on Air India’s assets, debts and its hotel subsidiary,” Mr. Jaitley said.

Also Read

Debt biggest challenge for Air India's disinvestment

 

Refusing to give a timeline on Air India’s disinvestment, Mr. Jaitley said the group will send a proposal for the Union Cabinet’s final approval. The Finance Minister said Prime Minister Narendra Modi will take a call on the members who will be a part of this group.

While the Central government think-tank NITI Aayog and the Finance Ministry are in favour of an outright sale of the ailing airline, the Civil Aviation Ministry is keen that the government continues to remain a stakeholder in the national carrier after handing over the management to the private sector.

Air India was founded by J.R.D. Tata in 1932 as Tata Airlines which became a public limited company in 1946. Air India was later nationalised in 1953.

The plan to privatise Air India was first mooted by the National Democratic Alliance (NDA) government in 2000. It had then decided to sell 51% stake in erstwhile Indian Airlines and 60% shares in Air India. However, the plan was shelved following protests from the Civil Aviation Ministry.

Privatisation talks were revived earlier this year after the present NDA government said it will not be in a position to bear the over Rs 50,000 crore debt owed by the national carrier to banks and other agencies.

History: 1932: Founded by J.R.D. Tata as Tata Airlines – country’s first scheduled airline 1946: Tata Airlines became a public limited company under the name of Air India 1948: Government of India acquires 49% stake in the company; starts international operation under brand of Air India International 1953: Air Corporation Act enacted to nationalise all existing airline assets and Indian Airline Corporation (domestic operations) and Air India International were established 1962: Air India International named as Air India 1994: Air Corporation Act repealed to allow private airlines to operate on domestic routes; Air India, Indian Airlines converted into Limited Companies under Companies Act, 1956 2000: Previous NDA govt drops privatisation plan after deciding to sell 51% of equity of Indian Airlines and 60% of Air India 2007: Erstwhile Air India and Indian Airline were merged into single entity named as National Aviation Company of India Limited (NACIL) 2010: NACIL renamed as Air India Limited 2012: UPA govt rule out AI privatisation; Turnaround plan to infuse over Rs 30,000 crore till 2021 approved 2017: NDA govt approves in-principle approval of Air India's disinvestment

 

Some facts on Air India 118 aircraft out of which 77 planes owned, 22 on sale and lease back and 19 on dry lease Fleet includes a mix of Boeing B777, B747, B878 and Airbus A319, A320, A321 and ATR42, ATR72360 flights daily More than 18 million annual passengers

 

Market Share of Air India

2013 19.4%

2014 18.4%

2015 16.4%

2016 14.6%

2017 13.3% (till May)