It should not come as a big surprise that nobody stepped forward to express interest in the bidding for Air India, the loss-making State-owned airline. Saddled with 16,834 employees and a debt liability of Rs 33,392 crore, it would have been a stretch for anyone to take over an airline that had run up accumulated losses worth Rs 32,194.2 crore. The
- Published 5.06.18
It should not come as a big surprise that nobody stepped forward to express interest in the bidding for Air India, the loss-making State-owned airline. Saddled with 16,834 employees and a debt liability of Rs 33,392 crore, it would have been a stretch for anyone to take over an airline that had run up accumulated losses worth Rs 32,194.2 crore. The government had tried to dress up the opportunity to bid for the national carrier by suggesting that the winning bidder would be permitted to trim the bloated workforce and take advantage of a reduced tax liability arising from the accumulated losses, and an unabsorbed depreciation of Rs 31,805 crore. But the biggest turn-off for the prospective bidders was the fact that the Government of India was determined to hang on to a stake of 24 per cent in the airline. The bidders were clearly wary of the scope for government interference in the working of the airline after the takeover. The government had also set tough eligibility criteria for interested bidders who might want to form a consortium and establish a special purpose vehicle to take over the airline.
But the more uncomfortable truth is that a variety of vested interests seemed to have worked together to scuttle the sell-off of the airline. The Tatas and Interglobe Aviation, the owners of IndiGo, were seen as obvious contenders with the possibility that Jet Airways might also be interested. But just two days before the bids closed, the Central Bureau of Investigation stunned everyone by filing a charge sheet against the AirAsia Group for lobbying the GoI to overturn its 5/20 aviation policy that had been framed in April 2004 and was designed to bar any domestic airline with a fleet of less than 20 planes and five years of operational experience from flying to overseas destinations. The charge sheet named a Tata group trustee as one of the offenders: many saw it as a warning signal to stop Bombay House from bidding for the airline. At the same time, the Securities and Exchange Board of India sent a notice to Jet Airways seeking information on some old, supposedly fraudulent, transactions involving the airline and its promoter, Naresh Goyal. It was clear that someone wanted to ensure that there were no bids for Air India.
The collapse of the divestment plan for Air India will now ensure that bureaucrats, politicians and the vast army of its serving and retired employees will continue to enjoy the perks and privileges that the national carrier has extended to them over the years. Air India has already received massive doses of State funding that have swelled its equity base to over Rs 28,690 crore. There is already a clamour now for the next dose of State funding.