Air India could cease operations if not privatised said civil aviation junior minister

November 29th 2019

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Tells Indian parliament Air India is a poor use of government funds. Read More »

Air India and Malaysia Airlines (MAS) are two Asian airlines on the market, but their respective governments have differing attitudes to their value.

The Indian government is committed to privatising Air India and ending years of subsidies. “Any further financial support in a mature and competitive aviation market would not be the best use of the scarce financial resources of the government," junior minister for civil aviation, Hardeep Singh Puri, told parliament this week. He said Air India could cease operations if it was not privatized.

Air India’s privatisation terms are being finalized. Once all details are settled, the government would open the airline to bidders, he said. The government is prepared to sell 100% of the flag carrier, Puri said.

The Malaysian government is evaluating bids for MAS, but details of the offers have not officially disclosed. MAS’s owner, sovereign wealth fund, Khazanah Nasional Berhad, said the airline had to be viewed in the context of its broad economic impact and not just for its financial accounts.

"What is your opportunity cost for supporting Malaysia Airlines? To be fair, every ringgit put into Malaysia Airlines may not be seen in profit and loss,” said managing director of the wealth fund, Shahril Ridza Ridzuan, as reported by OAWIAP last week.

Shahril acknowledged state support of MAS consumes limited government funds. “That is a ringgit you could have invested in something else,” he said.