Preparing the Script for Privatisation

The government finally concluded the sale of the national carrier Air India to Talace Pvt Ltd, a wholly owned subsidiary of the Tata Sons group. The sale includes the transfer of complete management control and 100% stake in Air India and Air India Express along with a 50% stake in the Air India SATS Airport Handling Services. The Tata Group’s successful bid of `18,000 crore includes about a quarter of Air India’s outstanding debt. The government has transferred the remaining debt of around `46,262 crore to a special purpose vehicle, Air India Assets Holding Ltd (AIAHL), to facilitate the repayment of this outstanding amount. Meanwhile, the remaining subsidiaries and non-core assets will also be transferred to AIAHL and could possibly be disinvested or privatised in the future. As a part of this privatisation deal, it is reported that the approximately 13,000 employees of Air India will be guaranteed employment in the new set-up for at least one year. Unsurprisingly, while the narrative has consistently portrayed a debt-ridden entity bleeding tax­payers’ money, the story reveals a deeper debt that the government will incur in the coming days of a purposive installation of market-led ­development at the cost of people-centric priorities.

The Tata Group, which has stoked nostalgia amidst certain circles (considering Air India’s origins can be traced to Tata Airlines founded by J R D Tata), has a small market presence in the domestic civil aviation sector with two joint ventures, Vistara and AirAsia India. It will now stand to significantly increase its presence with this new acquisition, while also gaining access to Air India’s international footprint, unmatched by any other airline in India. Currently, estimates suggest that this could mean at least a quarter or one-third of the domestic market share, and with IndiGo currently having the largest market share, this could impact the scope for other players. Somehow, privatisation in this case seems to be shifting towards a lesser competitive playing field, possibly creating quasi-monopolistic possibilities, especially considering that most airlines have been struggling owing to the pandemic.