The very poor appetite for Jet Airways surprised the government given the carrier was financially in a far better shape than Air India is today. Jet’s dues at close to `25,000 crore are smaller than Air India’s staggering `58,351 crore. Moreover, it enjoyed the biggest share of international traffic out of India of 13.5% and commanded a local share of 15%.

Although the government has transferred an amount of `29,464 crore to an SPV, lowering AI’s debt burden, investors may not be satisfied. This time around, the government intends to sell 100% rather than 76% but Air India’s large and expensive workforce — 27,000 employees at the end of December 2017 — could be a deal-breaker. Jet Airways had just 16,000 employees even though both airlines had fleets of roughly the same size with around 120 aircraft.

Adding to the government’s worries is the fact that Air India’s domestic market share has been consistently falling and plummeted to 11.8% in September last year. International traffic share was 10.4% in 2017-18 and has been declining for last few years. The national carrier has won bilateral flying rights with five countries — Dubai, Hong Kong, Qatar, Singapore and the UK — post the closure of Jet. In addition, it now has domestic slots for 22 flights, including Delhi-Bhopal, Bhopal-Pune, Delhi-Raipur, Delhi-Bengaluru, Delhi-Amritsar, Chennai-Bengaluru and Chennai-Ahmedabad, vacated by Jet Airways.

While the government proposes to sweeten the deal for investors this time around —for instance, it will offload the entire 100% stake rather than just 76% as it had planned to earlier —, industry experts remain circumspect. A preliminary memorandum is expected in the next 10-15 days.

The department of investment and public asset management (Dipam) in consultation with the ministry of civil aviation has already prepared a draft proposal which will be placed for the approval of the Air India Specific Alternative Mechanism (AISAM), a group of ministers.

Air India reported a loss of `7,635 crore in FY19 and had a total debt of `58,351 crore at the end of March 2019. Of the total debt, the government has transferred `29,464 crore, as well as non-core assets, and non-operational assets of Air India to a special purpose vehicle — Air India Asset Holding (AIAHL) — as part of a financial restructuring plan for the flag carrier.

In the Budget speech for 2019-20, finance minister Nirmala Sitharaman said the government is committed to sell Air India.

There were no buyers for the government’s 76% stake in Air India when the deadline for bids expired on May 31, 2018 possibly because government decided to retain a 24% stake and the lack of clarity on retaining employees.