Surprising Failure of Divestment Process is a Sad Reflection of the State of Air India

May 13, 2018by capa-india

Surprising Failure of Divestment Process is a Sad Reflection of the State of Air India

31 May 2018

CAPA expected significant interest in Air India, at least at the Expression of Interest stage. So, the fact that not even a single submission was received is very surprising. The outcome can be treated as a significant failure of the divestment process and a sad reflection of the state of Air India.

The privatisation of any flag carrier is invariably a politically sensitive transaction, and with India entering an election year there could be a temptation to drop the divestment plans. That would be unfortunate, and costly. Taxpayers will be left to fund potentially billions of dollars of losses over the coming years. Instead, the government should ideally move ahead with a comprehensive restructuring of Air India under a special administration, followed by 100% privatisation with less complex terms.

But whichever route it takes, it is critical that the government provides strategic clarity on the next steps as soon as possible.

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