The Ideal Buyer for Air India

Apparently the Indian government has finally decided that selling Air India is an option. I am not super confident that anything will come of it. For starters, right now there is only a cabinet resolution; which gives them a lot of wiggle room to back out of it later on. The working group, not yet constituted, could come up with impossible sale conditions. Parliament might scupper privatisation. Union politics might make the government do a hasty U-turn.

Also, as someone whose cynicism with regards to Arun Jaitley grows every month, the fact that the original announcement was made by him, makes me even more doubtful that anything will ever happen. The man seems to be trotted out every so often on to television to make the BJP palatable to liberals, and then nothing actually happens. Do you remember how:

  • before the Lok Sabha elections, he said that of course Parliament could legislatively repeal Section 377? Then when Shashi Tharoor brought in his private member’s bill, the BJP voted against it.
  • two budgets ago, he said that starting the next year, he would cut corporate tax rates by a percentage point every year? I’m still waiting.
  • he decided to not legislatively bar retrospective taxation, after all that sound and fury, instead just promising that he would never do it?

So when Jaitley says that selling Air India is a desirable objective, I for one suspect that this is just a new round of talk before meeting with funders, and actual action will be short on the ground. Of course, this assumes that anybody actually wants to buy Air India, which is a bit of an ask. So far, we have had the fun spectacle of seeing Anand Mahindra saying he isn’t brave enough to take it on, and its shareholders panicking at the thought that Indigo might be.

Which is the biggest problem, really. Even assuming that Bharat sarkar is sincere in wanting to sell Air India, and not just making suitable noises; and that union opposition is overcome, then what? Nobody who was accountable to shareholders, or had any sense, would buy it.

That doesn’t mean that nobody would buy it. There are people who aren’t accountable to shareholders, or who can defy them, and who don’t have sense. Ratan Tata, the past few years have shown us, comes close to that happy situation. But even he is surpassed by a certain class of dilettante airline operators. I speak, of course, of Arab sheikhs.

In the past few years, the Middle Eastern airlines have recklessly and cheerfully expanded. They run half empty flights to the United States, introduce new and unprofitable sectors just for the prestige of running ‘the longest flight in the world’, and are engaged in an arms race when it comes to just how ridiculously luxurious they can make their first class product. Alas, as oil prices have fallen, some cost cutting has started taking place, and maybe even the Middle East 3 won’t be brave or foolhardy enough to buy Air India. Emirates or Qatar Airways might just buy Air India to replicate the Etihad – Jet model and run shuttle services to Dubai or Doha as applicable, but I wouldn’t count on it.

Though the ideal buyer for Air India, in my opinion, isn’t Emirates or Qatar. It’s Saudia – the national airline of Saudi Arabia.

Why, you ask? This is not because I am a fan of Saudia (I have never even travelled on it) and feel that nothing would improve Air India flights like a no-liquor policy. It is more that I feel that the greatest contribution the government of India could make to world peace is to saddle Saudi Arabia with an airline that haemorrhages money every year, will give its owners severe grief when it comes to human resources issues, and pit the irresistible force of Ravindra Gaikwad against the immovable object that is the Ministry for the Prevention of Vice and Promotion of Virtue. Every riyal Saudi Arabia spends on keeping Air India aloft, will be a riyal they are not spending on setting up radical mosques or bombing Yemen or doing the dirty on Iran.

Maybe the way to get this to happen is to get Qatar Airways to express interest. And then Saudi Arabia would try to buy Air India instead, out of pure spite for Qatar. After which, we could try to add on persuasion by suggesting that running Air India would be the ideal way for one of the surplus princes to occupy himself.

One can dream.

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