Perhaps there is such a thing as third time lucky. The privatisation process of Air India that achieved fruition recently is the third attempt of the Indian government to offload the money-guzzling national carrier. In fact, attempts were on as early as at the turn of the century.
Atal Bihari Vajpayee, who was prime minister from 1998 till 2004, had kicked off an ambitious project to divest government ownership of many public sector companies, with aluminium maker Balco, VSNL in telecom infra and ITDC in hotels to be the first off the block. The government’s thoughts soon veered towards Air India.
In May 2000, the Union cabinet decided to sell 60 per cent of its holding in Air India. Tatas were keen then, too, forming a joint venture partnership with Singapore Airlines to bid for the airline that was once theirs. The Hindujas were the other serious contender. However, the disinvestment process did not move forward and both players withdrew from the race two years later.
Before the next attempt at privatisation 18 years later, the airline went in for a disastrous strategic merger with domestic carrier Indian Airlines, under civil aviation minister Praful Patel. It only made its bottom line worse, with AI lapsing into a morass of loss it never recovered from.
Patel’s successor, Ajit Singh, even exasperatedly said in an interview that “privatisation is the only way to save Air India”. But true to the United Progressive Alliance’s stated resolve to not go for disinvestment, no move was undertaken.
After the UPA fell and Narendra Modi took over as prime minister, the Union cabinet again bit the bullet, this time putting up 76 per cent of the airline’s stake for sale. It was a ‘zero visibility’ cancellation of take-off this time, as the deadline came and went in 2018 with no bidders. Whispers in the market made it clear that no private player was ready to take on the debt-laden burden of the airline and on top of it deal with interference from the government that held the remaining 24 per cent stake.
With realisation dawning, the government formed a group of ministers under Home Minister Amit Shah to actively pursue the sell-off. They sweetened the deal by offering 100 per cent stake, hiving off the debt into a separate asset management company and letting the bidders quote enterprise value. And third time’s obviously a charm as the government finally got the albatross off its back. For the Tatas, though, the hard work is just beginning.