BJP government pushes Air India into financial morass to hasten privatization
28 September 2018
India’s Narendra Modi-led Bharatiya Janata Party (BJP) government is pushing Air India, the heavily indebted, state-owned airline, toward a financial precipice so as to facilitate its breakup and privatization.
Events suggest the Modi government may even choose to force Air India into bankruptcy, as happened with Swissair following the mid-1990s “deregulation” of Europe’s airline industry. This would open the door to hedge funds and other vulture capitalists hiving off the airline’s considerable assets, including aircrafts, hotels, and other properties, while leaving the Indian people to pay for the airline’s debts through increased taxes and social spending cuts.
Earlier this year, the BJP government tried to sell off a 76 percent ownership stake in Air India and 100 percent of its low-cost carrier, Air India Express, but did not receive a single purchase offer by its May 31 deadline.
India’s principal air carrier is weighed down by a massive combined short and long-term debt, which as of March 31, 2017 stood at 658 billion rupees (Rs) or $10.3 billion. Interest payments on this debt amounted to a massive Rs. 42 billion in 2017 ($650 million) while profits were a measly Rs. 57 million ($890,000).
The Modi government has been deliberately exacerbating the airline’s crisis by withholding the funds Air India desperately requires for its long-term survival. This is because the government is determined to use the crisis to push for a corporate restructuring aimed at slashing costs and squeezing more profit from the workforce, in order to make Air India more attractive to private investors.
The Modi government’s hard line towards the airline, which…