The disinvestment of public carrier Air India was to be the central government’s flagship sale in this new era of privatisation. However, the May 31 deadline came and went with no private bids. Despite months-long speculation that both Air Vistara – partially owned by erstwhile Air India founders Tata – and IndiGo had considered the purchase, there was no formal interest.
In light of this unsuccessful disinvestment, the Modi government has decided to re-evaluate its stance on the sale. Despite the nine-figure debt, Air India was expected to raise interest. With a large ground crew, maintenance staff, and important airplane berths at both domestic and international airports, the public carrier had reason to be optimistic about the sale.
One of the primary options that the government is considering foregoing is the retention of a 24% stake in the company. According to Capitalmind Wealth CEO Deepak Shenoy, this stake was a potentially brilliant move. Had the disinvestment plans gone through, it would’ve left the government with shares of company that would probably be better run and more efficient in the future.
Essentially, they could have converted a debt-laden public burden into a financial asset – through the work of a private entity! However, with the failure of the disinvestment, it seems like that option will be off the table in the future.
However, a bigger problem might actually be that private investors wanted smaller portions of the public carrier, not a 100% stake. Most companies, and IndiGo in particular, were rumoured to be interested in particular parts of the Air India machine. While the planes themselves are problematic, Air India’s service teams were valuable. However, as one indivisible entity, the public carrier did not provide the same advantages.