Indian Cabinet Approves Air India Sale Plan

India’s cabinet has given “in-principle approval” for the sale of part of the government’s shareholding in Air India.

The go-ahead marks the start of a privatisation process that would see the heavily indebted national airline transferred to the private sector. Previous attempts to sell the Indian flag carrier have all failed.

India’s finance minister Arun Jaitley said the government would form a committee to decide on the details of the sale, including the size of the shareholding to be sold initially and how to deal with the airline’s INR520 billion rupee (USD$8 billion) debt.

Once the pride of Indian aviation, Air India was merged with state-owned, predominantly domestic carrier Indian Airlines in 2007. The combined carrier continued to make losses, with debt reaching INR426 billion rupees (USD$6.6 billion) in 2011 on an operating loss of INR220 billion (USD$3.4 billion). The previous Indian government bailed out the airline with a INR300 billion rupee (USD$4.65 billion) package in 2012.

Several attempts to privatise Air India have been made, but political opposition and the airline’s debt doomed them to failure. Cabinet approval for another go at a sell off appear more positive this time, with the government looking at ways of making the airline more attractive to investors.

Air India is currently the third largest carrier in India, after IndiGo and Jet Airways.