Air India’s Privatization And Regulatory Deficit

Context: Due to the poor administration of Air India by successive governments, its purchase by the Tata Group has spelt relief and hope.

Background: Government divested its 100% stake to TATA. TATAs will take over only a portion of the airline’s outstanding debt, without its real-estate assets.

Reasons for Collapse of Air India :

• Frequent boom-bust cycles in aviation industry: Affected sustainability and reflected in poor quality of customer service.
• Inept & Corrupt government administration resulted in the collapse of Air India.
• Lack of autonomy to professional management teams. They were not given a free hand to develop a strategy and execute it, as in Singapore Airlines, Emirates and Etihad.
• Mismanagement over the decades by governments such as

• • Implementation of Non Financially Justifiable decisions like trading away valuable landing slots, & acquiring aircraft far in excess leading to huge debt.
  • Fudging accounts and going in for needless expenditure programmes.
• Misplaced priorities: Well-being of airlines prefered over the welfare of flyers.

Conclusion: Need of the hour is good regulation by a strong independent & Empowered regulator for civil aviation that focused on consumer interests while keeping crony capitalism at bay.