The government is committed to selling Air India. We should all be relieved

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“Nobody wants anyone to become unemployed. We don’t want Air India to go the Kingfisher (Airlines) way,” Civil Aviation Minister Ashok Gajapathi Raju told Parliament on Thursday, reiterating the government’s decision to continue divestment of the loss-ridden national airline.

Here’s why we should all be relieved:

Why should you be happy?

Air India continues to makes losses – huge ones, year after year.  

According to figures tabled by the Ministry of Civil Aviation in the Lok Sabha on Thursday, Air India has debt worth Rs 51,890 crores. The national airline also racked up losses worth Rs. 19,619.28 crores between FY 2013-14 and 2016-17. 

Just to put Air India’s Rs 51,890 crore debt in perspective, all of India’s preventive care expenditure — including those of government funded national health programmes — put together was Rs 40,627 crore in FY 2013-14, according to National Health Accounts (NHA).

Simply put, lives could be potentially saved or more children could be educated if Air India were to become profitable or sold.

In June, the Union Cabinet had cleared disinvestment of the airline but nitty-gritties, including the quantum of stake sale, will be decided by a group of ministers headed by the finance minister Arun Jaitley. For now, the airline is surviving on a Rs 30,000 crore bailout package from the UPA government in 2012. 

Is Air India unique?

Not actually. Most government owned airlines, across the world, struggle. Italy’s national airline Alitalia is bankrupt and the government is looking for suitors. There are a few exceptions with the national carriers of Qatar, Singapore and countries in the United Arab Emirates (think Etihad and Emirates) which make profits, mainly because they are run like private businesses with lots of operational freedom.  

Airlines, private or government run, struggle more often than not to make profits as many variables affect their business — most important of which is oil prices. With big oil producers Russia and OPEC attempting to curb oil production, oil prices are likely to spike up in 2018. That might be another good reason for the Indian government to hasten the sale of Air India.  

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