Nathan’s Aviation-Sector Research Supports Air India Divestiture News Feed

Location: India

India’s cabinet announced on 28 June 2017 to approve privatization of Air India following the recommendations by the government’s reform-oriented think tank Niti Aayog. 

Research published in 2012 by Nathan Associates justifies the decision to sell all or some of the national government’s stake in Air India and five Air India subsidiaries. Nathan recommendations were submitted to the Ministry of Corporate Affairs and considered by a committee chaired by the Secretary of Civil Aviation at the time. The chief author of the Nathan report, Ram Tamara, Ph.D., participated in the committee’s deliberations as a special invitee.

“Bringing in private players and capital to operate India‘s national carrier will help address some of the airline‘s operational issues, while freeing government funds for other purposes,” Nathan economists said in Research Study of the Civil Aviation Sector in India

The economists also noted that even partially privatizing Air India “would create incentives for the carrier to compete with other airlines, since Air India‘s private investors would seek to maximize return on their investment.” 

Nathan’s far-reaching study, which examined regulations, practices, policies, and rules for their impact on competition in the sector, was one of three reports Nathan produced in 2012 for the Government of India. The second and third studies looked at the pricing of aviation turbine fuel and airline tickets. 

In 2016 the government lifted a major barrier to domestic airlines’ offering international flights, and in 2013 the government permitted airlines to charge fees for services to increase ancillary revenue—actions that had been recommended in Nathan reports. 

The airline industry represents just one sector Nathan economists have examined. A 2013 Nathan study examined the impact of priority-sector lending requirements on the broader availability of bank credit in 2013, and in 2013 Nathan published a thorough review of economic regulation in India.

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