Air India Disinvestment

WHY IN THE NEWS?

Recently, the government approved the highest price bid of Talace Pvt Ltd, a wholly-owned subsidiary of Tata Sons Pvt. Ltd for sale (Disinvesting) of 100% equity shareholding of Government of India in Air India (AI).

• The Tatas will own a 100% stake in AI, as also 100% in its international low-cost arm Air India Express and 50% in the ground handling joint venture, AI SATS.

Reasons for Disinvestment:

• It is hoped that with AI passing into the private sector, its operations and costs will get streamlined, services on board will improve and basic services like wi-fi will also be made available.
• A strong international carrier in India will give a boost to the large airports built in Delhi, Hyderabad, Mumbai and Bengaluru which along with AI will be able to win back some of the tourist dollars from Indians travelling abroad who are currently travelling on foreign carriers.
• A successful turnaround of Air India could also help the Indian economy as it is a well-established fact that aviation has a multiplier effect on the economy.
• There is a pressure on the government to raise resources to support the economic recovery and meet expectations of higher outlays for healthcare.

Significance:

• It will save taxpayers money from paying for daily losses of AI.
• It will help push other tough decisions the government is keen on taking.
• It will possibly give the option of flying one more low-cost carrier domestically.