The much-awaited sale of the national carrier attracted no buyer. The writing was on the wall. Some concern had been expressed by the prospective bidders that the terms of proposed sale were not attractive enough. Firstly, the huge debt, estimated to be around INR 48,877 crore, that would come with the airline, the determination of the government to retain 24% equity, and then the uncertain future of Indian aviation were all dampeners. Did the government go ahead, with unfriendly terms for the private sector? Or, was the timing not conducive. The PM himself is on record that the timing of the sale has been deferred to get a fair price. The point is that we did not get any offer! Then regarding the timing, this is perhaps as good a time as any. In fact, timing can get worse, with oil prices a good 30 percent higher over the last year and the Indian rupee set to slide to a new low against the US dollar. It is highly likely that oil prices would hover around a minimum of 75-80 USD/barrel for the foreseeable future. Yields are likely to take a hit, with cost on both fronts going up, and with more than 1000 planes on order, the airlines are unlikely to raise fares and deter a market growing at 18 percent year-on-year. Price per seat will come down, ensuring that more bums take to the skies. 

The Air India management has asked the government for an immediate restoration of INR 2200 crore equity to meet its immediate needs. Also, faced with a massive fund crunch, the airline, between September last year and January this year, had borrowed over INR 6250 crore from several banks for meetings its working capital and other needs. Instead of subsidizing the airline, month after month, would it make more sense to take away the legacy debt from the airline, and give it a fresh start? There seems to be lack of a roadmap on how the loss incurred by the carrier will be recovered. And if the airline is not getting sold anytime soon, would not it be prudent to at least hand over the direct management to a transparent set of proven leadership from among the corporate world? At least, let the government not continue to run the airline.

The sale of Air India would have been a bold statement of political intent by the government, especially with the general elections around the corner, that it means business to be not involved in the business of operating Air India. Is it a case of a missed opportunity?