India approved plans to privatize Air India

Vastavam web: India approved plans on Wednesday to privatize debt-laden Air India, the first step of a process that could see the government offload an airline struggling to turn a profit in the face of growing competition from low-cost rivals.Finance Minister Arun Jaitley told reporters after a cabinet meeting that the government had given an “in-principle” approval for the sale of a stake in Air India.India will now form a committee to decide on the details, Jaitley said, including the size of the stake to be sold and whether the government should write off part, or all, of Air India’s 520 billion rupees ($8 billion) in debt – a step some officials say is a must to attract buyers.

Once India’s biggest airline, Air India’s market share in the booming domestic market has slumped to 13 percent as private carriers such as IndiGo, owned by InterGlobe Aviation (INGL.NS), SpiceJet (SPJT.BO) and Jet Airways (JET.NS) expanded.Some officials in the civil aviation ministry have said it would be better to dispose of the airline’s subsidiaries and property holdings initially to lower the debt burden and ensure taxpayers benefited if the airline’s performance improved.The airline, which was founded in the 1930s by the Tata Group before being nationalized after Indian independence in 1947, has failed to make money since a botched merger in 2007.