A decision by the Indian government to sell state carrier Air India will not be easy and will likely need at least a partial write-off of its debts, said aviation experts.
The Indian Cabinet last month approved the sale of Air India, which has an US$8 billion (S$11 billion) debt, and set up a ministerial group to look into how the government should proceed, including whether to keep a stake in the airline. Experts said the government has a long road ahead in disinvesting the carrier.
"There is potential (in Air India) but the government will have to do something about the debt... They may also have to hive off different subsidiaries like ground handling operations," said Mr Rajan Mehra, chief executive officer of Club One Air, a luxury air-charter firm. Air India has five subsidiary companies.
Yet the government faces opposition from Air India unions, which have warned of "industrial unrest" if privatisation goes ahead. Around 8,000 employers are planning a protest next Tuesday , and it is expected to be the first of many.
Air India, set up in in 1932 by businessman J. R. D. Tata, was India's most recognised brand but has over the years acquired a reputation for poor service and delayed flights.
The company, which has around 20,000 employees, has been incurring losses for years though the government has been injecting money every year. Experts put the decline down to years of mismanagement, the acquisition of expensive planes and the failure to trim costs.
India's aviation sector has seen a boom in the last decade as economic growth fuelled a growing middle class that has opted for planes instead of trains. India this year became the third-largest aviation market in the world for domestic travel, handling 100 million domestic passengers last year, according to the Capa Centre for Aviation.
India's ailing national carrier
2007: The Indian government merges Indian Airlines, its domestic carrier, into Air India, its international carrier. 2009: Air India posts a loss of 72 billion rupees.
2012: The Indian government approves the Turnaround Plan and Financial Restructuring Plan for Air India, which includes government funding of 302.3 billion rupees (S$6.4 billion) till 2020 to 2021.
2013: The National Transport Development Policy Committee said Air India has struggled in its transition from a monopoly to a competitive market with other airlines.
2016: Air India's losses stand at 38.37 billion rupees.
June 28, 2017: The Indian government announces plans to privatise Air India, setting up a group led by Finance Minister Arun Jaitley to go into the details.
Past governments have shied away from privatising Air India, the country's third-largest airline in terms of passenger numbers.
Mr Jitender Bhargava, a former executive director of state-owned Air India, believed the government would find buyers, providing it did not impose stringent conditions.
India's biggest airline Indigo has expressed its interest in buying a stake, according to an Indian television report. The Tata Group, which has a historical connection to Air India as it was set up by its former chairman J. R. D. Tata, is also interested, Indian media reported.
Tata Sons runs Vistara, a domestic carrier, as a joint venture with Singapore Airlines, and has another tie-up with Air Asia.
"Air India will be attractive for a potential buyer. Yes, it is a legacy carrier but it has value in its assets, global carrier slots and parking spaces in major international airport (among others)," said Mr Bhargava.
"Without privatisation, Air India will not survive. The time is right. India is in a growth mode of 20 per cent plus in aviation, ATF (air turbine fuel) prices are low, so anybody who buys it can reap benefits, apart from the other assets."
Air India has tried to cut costs by, for instance, serving only vegetarian meals in economy class on domestic flights, a move criticised as being discriminatory.
"These are exciting times for aviation. If the Air India privatisation does happen, it will be a game changer," said Mr Mehra.