Air India divestment: How much leeway will an investor have in govt-owned airline, IATA chief wonders

With Air India disinvestment failing to take off, global airlines' grouping IATA has said that a carrier has to be "nimble and flexible" even as he wondered how much leeway an investor would have in managing a government-owned airline. The proposed 76 per cent stake sale in Air India did not attract any bidders at the end of May and there were speculations in certain quarters that government's decision to retain stake in the debt-laden carrier might have kept away potential investors.

In an interview to PTI, the IATA Director General and CEO Alexandre de Juniac said the government would be in a better position to analyse why the Air India stake sale process failed. Responding to the query related to the failed Air India disinvestment process, he also remarked, "how much leeway would an investor of a government owned airline have in managing the airline as a normal business".

Further, de Juniac noted that the airline industry operated in "a fiercely competitive environment. "There is a need for an airline to be nimble, flexible and responsive to passenger needs," he added. He said that firstly there was a need to have a conducive environment for airlines to do business. Even with the growth potential of the Indian market, de Juniac said airlines are operating in a challenging environment, given the huge tax burden, government's micro-management of the airline service offerings and high fuel prices.

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Air India is also a member of the International Air Transport Association (IATA), which represents more than 280 airlines across the world. Last month, the government made it clear that it was committed to strategic disinvestment of Air India. Under the proposed plan, the government was to sell 76 per cent stake in Air India along with complete divestment of low-cost arm Air India Express and a 50 per cent stake in Air India SATS Airport Services Pvt Ltd -- an equal joint venture with Singapore's SATS.