06 Sep 2017 15:13 IST

The privatisation pill for national airlines. Does it work?

Global examples show some simply didn't take off. Others, continue to sail

Privatisation might be the last lifeline left for Air India, bogged down by operational issues and a swelling debt. It might do bureaucrats and suitors good to look at how some of the privatisations of national carriers panned out.

British Airways

A typical government airline that was bureaucratic, British Airways' turnaround started when Prime Minister Margaret Thatcher hired Colin Marshall as its CEO in 1983. The privatisation in 1997, was a successful part of the exercise. In 2011, British Airways became part of the International Airlines Group, which has Qatar Airways as one of its biggest shareholders. Though of late the airline has lost ground to peers like easyJet, British Airways continues to be an icon.

Air Malawi

The Malawi Government made three attempts at privatising its national airline. The first, in 2003, failed because the successful bidder failed to make a security bond. The second attempt didn't materialise in 2007, because of differences with the biggest bidder. But in 2013, Ethiopian Airlines made a success of the process but made a change. Air Malawi was shut down, and instead Malawi Airlines was created.

May be, a name change could do good for Air India too.

Air Jamaica

The airline started off as a public-private partnership in 1968. Air Canada, which owned 40 per cent stake, exited in 1980. Nine years later, Jamaican government announced its intention to privatise the airline and in 1994 there was a partial sell off to a group of investors. But by 2010, the airline had been in losses for 40 of its 42 years. A year later, the Jamaican government sold its national airline to Caribbean Airlines, the flag carrier of Trinidad & Tobago. In 2015, Air Jamaica completed its merger with Caribbean Airlines, and ceased to exist.

Air Botswana

The airline can be a case study on how a privatisation attempt never takes off. The first shot at selling the company was taken in 2003, but the global downturn post the 9/11 attacks made it a non-starter. The second attempt didn't materialise because the government didn't agree to the suitor, South Africa's Arilink, suggestion to replace the national colours of the airline. The search for a management company was a failure.

Even Russian billionaire Alexander Lebedev's attempt to buy Air Botswana in 2008 didn't work out. The airline continues in its form today, beset by corruption and internal squabble.

Kenya Airways

Kenya's national airline became the first one in Africa to privatise successfully when 26.73 per cent stake was taken by Dutch company KLM in 1996. While the going was good for the airline after that, the spate of terror attacks since 2011 has taken some of the wind from its wings. It has been in talks with its lenders to convert debt into equity.

(The article first appeared in The Hindu BusinessLine.)