Tatas-Air India deal: Crippled Airline, and privatisation to fly – The Economic Times

Clipped from: https://economictimes.indiatimes.com/opinion/et-editorial/tatas-air-india-deal-crippled-airline-and-privatisation-to-fly/articleshow/86877473.cmsSynopsis

The Tatas will have to decide how many airline brands they want to manage, and how best to utilise the extra manpower they get with Air India. Happily ever after is some distance away.

Air India is finally off the government’s back. That is a welcome development. As far as disinvestment proceeds go, what the government gets from the sale of the airline is ₹2,700 crore in cash and freedom from further accumulation of loss and debt. But the meagre financial gain is more than offset by, one, breaking a jinx on privatisation of State-owned companies that has held sway for far too long; two, the freeing of the civil aviation ministry from having to run an airline (and keep fielding requests for upgrades and other favours from those with access to the levers of power), so that it can turn its attention on policy and regulation of India’s fast-growing civil aviation, complete with new aerial mobility by way of drones, big and small; and, three, the beginnings of a new, world-class airline.

To enable the sale, the government has had to park ₹46,262 crore of debt in a State-owned holding company, along with prize real estate assets of the airline. Taking the real estate assets out of the entity being sold eliminated scope for much controversy. The government did well take out as much of the debt from the company as was needed to find a buyer. Some would say the Tatas were the only serious bidder. But that is fine, the Tatas are a good fit for Air India, whose original had been founded by the Tatas, before it was nationalised. It is worth noting that the normally vociferous unions of the airline have not gone on the warpath against privatisation. And the credit goes to the identity of the buyer, and its reputation for fair dealing.

The Tatas will have to decide how many airline brands they want to manage, and how best to utilise the extra manpower they get with Air India. Happily ever after is some distance away.

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