{"id":36225,"date":"2018-11-02T11:15:53","date_gmt":"2018-11-02T05:45:53","guid":{"rendered":"https:\/\/blog.forumias.com\/?p=36225"},"modified":"2018-11-02T11:15:53","modified_gmt":"2018-11-02T05:45:53","slug":"dont-fly-into-the-same-storm","status":"publish","type":"post","link":"https:\/\/forumias.com\/blog\/dont-fly-into-the-same-storm\/","title":{"rendered":"Don\u2019t fly into the same storm:\u00a0"},"content":{"rendered":"<p><a href=\"http:\/\/www.thehindu.com\/todays-paper\/tp-opinion\/dont-fly-into-the-same-storm\/article19267655.ece\"><span style=\"font-weight: 400;\">Don\u2019t fly into the same storm<\/span><\/a><span style=\"font-weight: 400;\">:\u00a0<\/span><b><\/b><\/p>\n<p><b>Context:<\/b> <span style=\"font-weight: 400;\">Air India\u2019s disinvestment, first attempted by the Atal Bihari Vajpayee government, is being revived.<\/span><\/p>\n<p><b>Introduction:<\/b><\/p>\n<ul>\n<li><span style=\"font-weight: 400;\">The sale bid the last time was a flop, shelved prematurely after all the bidders were either disqualified or dropped out.<\/span><\/li>\n<li><span style=\"font-weight: 400;\">In May 2000, bids were invited for a 40 per cent stake in Air India, with a cap of 26 % on foreign investment.<\/span><\/li>\n<li><span style=\"font-weight: 400;\">The airline had reported losses for six straight years, had $ 70 million debt on its books and was fast losing traffic.<\/span><\/li>\n<li><span style=\"font-weight: 400;\">More than 18,000 workers were on its rolls for a fleet of just about two dozen planes.<\/span><\/li>\n<li><span style=\"font-weight: 400;\">Its employee-aircraft ratio, 750 was among the worst.<\/span><\/li>\n<li><span style=\"font-weight: 400;\">Singapore Airlines, in contrast, had 91 employees per aircraft.<\/span><\/li>\n<li><span style=\"font-weight: 400;\">Inefficiency, in a government controlled set up, was bleeding Air India.<\/span><\/li>\n<li><span style=\"font-weight: 400;\">The sale\u2019s stated purpose was to bring on board a strategic partner who would turn around Air India. However, a bidding rule that required foreign airlines to team up with a local partner forced them to opt out.<\/span><\/li>\n<li><span style=\"font-weight: 400;\">Singapore Airlines, which had also expressed interest formally, roped in the Tatas to proceed with its bid.<\/span><\/li>\n<\/ul>\n<p><b>Description:<\/b><\/p>\n<ul>\n<li><span style=\"font-weight: 400;\">A Delhi based chamber of commerce wrote to the Prime Minister lobbying against foreign investors being allowed to acquire more than 25 per cent stake in Air India, as this was the rule in U.S, China, Thailand and Mexico.<\/span><\/li>\n<li><span style=\"font-weight: 400;\">Under Indian law, investors owning fewer than 26 per cent shares cannot move special resolutions, a restriction that did not apply in the countries the letter cited.<\/span><\/li>\n<li><span style=\"font-weight: 400;\">After the sale was scrapped, private airlines flourished.<\/span><\/li>\n<li><span style=\"font-weight: 400;\">Although Air India\u2019s fleet which includes its subsidiaries has now grown to around 150 aircraft, it has lost traffic and market leadership to competition.<\/span><\/li>\n<li><span style=\"font-weight: 400;\">The contest was down to two bidder- the Hinduja group and the Singapore Airlines-Tata joint venture.<\/span><\/li>\n<li><\/li>\n<li>Both were invited to inspect Air India\u2019s book.<\/li>\n<\/ul>\n<p><b>Present situation:<\/b><\/p>\n<ul>\n<li><span style=\"font-weight: 400;\">Air India\u2019s debt, now about $8 billion, is growing unsustainably.<\/span><\/li>\n<li><span style=\"font-weight: 400;\">It was bailed out with $ 5.8 billion of taxpayer money in 2012.<\/span><\/li>\n<li><span style=\"font-weight: 400;\">The sale\u2019s purpose should be to compensate taxpayers for shouldering the burden of keeping the national carrier afloat.<\/span><\/li>\n<li><span style=\"font-weight: 400;\">Air India\u2019s disinvestment could deliver this if it results in reduced government interference and increased competition.<\/span><\/li>\n<li><span style=\"font-weight: 400;\">Competition in the air travel market will not increase if Air India gets acquired by a private airline in India.<\/span><\/li>\n<\/ul>\n<p><b>Conclusion:<\/b> <span style=\"font-weight: 400;\">The rules should provide foreign airlines a level playing field. Sharp scrutiny of objections can expose and thwart hidden vested interests. Selling only a part of the government\u2019s holding will not free India of the ills of public ownership. The government will have to exit the airline clearly and completely.<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Don\u2019t fly into the same storm:\u00a0 Context: Air India\u2019s disinvestment, first attempted by the Atal Bihari Vajpayee government, is being revived. Introduction: The sale bid the last time was a flop, shelved prematurely after all the bidders were either disqualified or dropped out. In May 2000, bids were invited for a 40 per cent stake&hellip; <a class=\"more-link\" href=\"https:\/\/forumias.com\/blog\/dont-fly-into-the-same-storm\/\">Continue reading <span class=\"screen-reader-text\">Don\u2019t fly into the same storm:\u00a0<\/span><\/a><\/p>\n","protected":false},"author":61,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"footnotes":""},"categories":[555],"tags":[],"class_list":["post-36225","post","type-post","status-publish","format-standard","hentry","category-test-1","entry"],"jetpack_featured_media_url":"","views":{"total":0,"cached_at":"","cached_date":1704915089},"jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/36225","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/users\/61"}],"replies":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/comments?post=36225"}],"version-history":[{"count":0,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/36225\/revisions"}],"wp:attachment":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/media?parent=36225"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/categories?post=36225"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/tags?post=36225"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}