Air India Begins Privatization Process

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Selloff of state carrier could relieve debt and improve overall service.

Air India could soon begin operations as a privately-owned company, after the Indian government gave permission for the carrier to seek a breakaway from the nation. BBC News reports the state-owned carrier will begin the privatization process after losing market shares to startup carriers and other international airlines operating in the region.

According to the Indian finance ministry, the government has approved an “in-principal” agreement to begin selling off the airline. How much of the carrier will be sold to private investors remains to be seen: The next step involves forming a committee to drive a sales plan. Government officials must also decide how to handle the carrier’s debt load, currently sitting at over $8 billion.

Plans to privatize the troubled carrier have been floated for the past five years, after the Indian government was forced to deliver a $5.8 billion bailout to save the airline. Previous plans for a carrier selloff have been protested by labor unions, who are now fighting to stop the current plan from going forward.

In addition to losing market shares to startup carriers in the region, including Jet Airways, Air India has faced a number of internal crises that have stunted progress. In 2015, the airline introduced a zero-tolerance policy for employee theft, a problem that has cost the carrier thousands of dollars. In 2016, the carrier cancelled 11,000 flights and delayed over 16,000 through the first six months of the year alone. By 2017, Air India announced a plan to fine passengers who cause aircraft to become delayed.

Today, the Star Alliance member remains India’s largest carrier, serving 41 international markets and nearly 20 percent of international flyers. However, among domestic flights, the airline only commands less than 15 percent of the market.

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