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  • Air India: Privatization Or Bust?
    Posted by Rupa Haria 12:42 PM on May 20, 2011

    If you were an investor, how would this IPO sales brochure tempt you: Company under fire for claims of corruption, continued safety concerns, a mountain of debt, fraught labor relations, and it can’t get its act together on a major industrial partnership, in this case joining Star Alliance after more than two years of talks?

    That's effectively what is going on as discussions mount over whether Air India should be privatized.

    This week two European airline chiefs have addressed the issue of privatization with the Indian media.

    IAG’s Willie Walsh tells the Economic Times that Air India should have restructured ten years ago. “I believe governments shouldn't get involved in aviation,” he says. “Does India today really need a national airline? No, it's very effectively served both by domestic and international airlines. I believe you've got to be completely realistic about problems – the same problems that were there five years ago, are still there. And whatever needs to be done, the sooner the better. How long is the taxpayer going to go on footing the bill?"

    And, he adds, in his experience "at some stage, someone finally calls a stop to it. Ultimately the scale of restructuring is so massive, that it becomes even more painful for the people involved. Air India's issue is that politics comes in – I believe governments shouldn't get involved in aviation.

    Meanwhile, the Hindustan Times carries an interview with Carsten Spohr, who runs Lufthansa airline business. he says that “national ownership does not help”. He goes on to say: "So is it the strength of an airline to be Indian? Yes. But should it be owned necessarily by government? I think the example has been proved around the world… probably it’s more of an advantage to have that beneficiary not to be owned by the government. But it's a question every government and every airline has to answer. But in Germany we have found an answer."

    And as Air India’s final deadline to join Star Alliance nears, Spohr’s airline has no doubt felt the majority of pain having to deal with the many layers of Indian bureaucracy as it helps Air India try to enter the alliance. The Indian carrier might even do the alliance a favor if it misses its absolutely final 31 July deadline as it would clear the way for it to continue negotiations with Jet Airways, a successful private Indian carrier.

    Tags: tw99, air india, india, jet airways, lufthansa, iag

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