While the Indian government is keen to sell off the loss-making state-owned carrier Air India, attempts to showcase it as an attractive proposition to buyers have not been successful.

Recent roadshows in Singapore and London, held to ascertain investor interest for the debt-laden national carrier, received a lukewarm response from potential bidders, Economic Times reports, quoting government officials.

Still, the government is going ahead with its plan to sell it. It is likely to finalize initial bidding documents for the carrier by next month.

According to the current timeline, New Delhi is likely to issue the expression of interest documents after the holiday season to ensure greater participation by foreign buyers.

A successful sale of Air India is crucial for the current government to help bridge a widening fiscal deficit exacerbated by dismal tax collections and a $20 billion corporate tax cut.

Air India hasn’t made any profit since its 2007 merger with state-owned domestic operator Indian Airlines Ltd. The carrier is saddled with US$ 11 billion in debt.

Last month India’s civil aviation minister, Hardeep Singh Puri, told the Parliament that the bleeding carrier will have to be shut down if it fails to find a buyer. Pumping more taxpayer funds into the airline in a competitive market “would not be the best use of scarce financial resources of the government,” Puri said.

A group of ministers overseeing the sale of Air India has already approved selling the entire government stake in the carrier as well as its low-cost, overseas unit, Puri told the parliament. Modi’s administration is considering a plan to exclude $7 billion of the airline’s debt in a bid to lure buyers.

But selling the carrier remains a challenge due to a tight civil aviation market. Airlines in India do not have the wherewithal to buy Air India. A foreign buyer can only take 49% stake under Indian laws and this may not be an attractive proposition to them.

However, Air India has some unique strengths to offer to a potential acquirer: its prized international slots and a strong presence in the Indian market (though diminished over the years).

Industry analysts warn that shutting down the airline, as the minister had threatened, is hardly an option.

It would remove a significant number of aircraft from the market. This would cause another round of the sort of turmoil that happened soon after the grounding of Jet Airways earlier this year.

Employees, creditors and a string of other stakeholders would be left in the lurch, at the mercy of the long-drawn-out bankruptcy process.

Bankruptcy would also lead to a monopoly-like situation with IndiGo, which already has a market share now close to 50%, further tightening its grip over India’s domestic civil aviation market.

In 2018 the Government tried to divest Air India, but there were no bidders. The government at that time offered to sell a 76% stake in Air India and retain 24%. This failed to inspire confidence amongst bidders as they felt government control of a quarter of the total stakes would lead to political interference.

There was also lack of transparency regarding the employee-retention clause. Bidders weren’t ready to deal with staff that couldn’t be laid off. This has now forced the government to come up with a more attractive proposition for the potential bidder.

Founded in 1932 by Jehangir Ratanji Dadabhoy Tata, the then chairman of Tata Group, Air India took off flying mail between Karachi and Bombay in then-undivided British India.

Once it turned commercial, the airline quickly became popular. In 1953 the Indian government purchased a majority stake in the carrier from Tata Sons, although J.R.D. Tata continued as its chairman till 1977.