The once-iconic Air India has witnessed a disastrous fall in the last four decades. What steps should the government take to transform the embattled airline ?
Published: December 6, 2019
Air India once operated in a near monopoly environment, but with the increase in competition it has witnessed a gradual decline in the last four decades. The government as a measure in the 1990s recommended the setup of the Divestment Commission of India which recommended the dilution of government’s stake to 40%. However, marred by bureaucracy the disinvestment efforts did not succeed, resulting in the poor condition of the fledgling airline.
A couple of reckless decisions such as acquisition of large number of aircrafts what it could afford, merger with Indian Airlines and doling out of seats to foreign airlines administration led to its failure. Air India’s precarious financial situation came to light in 2009 but the government instead of tackling the core problem provided a bailout package of ₹30,000 crore with an eight-year span ending 2021, has not helped Air India evolve into a robust carrier.
Steps to be taken by the government –
- Air India has once again been put for disinvestment by the Centre. The aim should be aim to exist completely to give the potential acquirer freedom to transform it into a successful player.
- To evoke interest in the airline which still commands a sizeable market share and an extensive global network that no other Indian carrier can match.
- Bringing on professional management with an effective leadership to provide a new direction to the company.
- Need for a consensus among stakeholders for disinvestment. Air India’s glorious past evokes emotions with a lot of people being averse to its sale. The major stakeholders need to be brought on the same page and convince them that disinvestment is the best way forward.
The disinvestment exercise needs to be pursued prudently and with determination if it is linked with prospect of transforming Air India into a robust carrier that the country can be proud of again.
Model Questions Category: 060 - Economic Growth Development