Air India Employees Have To Leave Staff Apartments After Privatization

As Air India closes in on becoming a private carrier, the government has begun the complex task of demerging its assets. One effect of the sale will be that at least 7,000 employees living in Air India-owned apartments in Mumbai will need to vacate within six months of privatization. Let’s find out more.

Air India A321 Getty
Over the last century, Air India has grown into a carrier will massive non-airline assets as well, all of which must go. Photo: Getty Images

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According to The Times of India, the government has announced further plans in the Air India privatization process. In particular, these decisions focus on benefits given to airline employees, namely apartments and the employee retirement fund. There are some notable changes coming in which will affect tens of thousands.

The government has decided that Air India’s land and colony in Kalani (minutes from the airport) will have to be vacated within six months of Air India’s privatization or the monetization of the land itself. The 184-acre Kalani colony is home to staff quarters for 7,000 employees, all of whom now much move out by the deadline.

Air India Mumbai Airport
Kalani is only 10 minutes walking from Mumbai Airport, making it an excellent place for employees to live. Photo: Getty Images

It’s important to note that this land will not go to Air India’s new owners. This land originally belonged to the Airports Authority of India, which leased it to AI for ₹14 crores ($1.88mn) a year. Once Mumbai Airport became private, the land went to developer GVK, which extended the contract and upped the price to ₹24 crores ($3.2mn) a year.

However, with Air India now set to be privatized, the government has opted to hand this land to the Adani Group, the new owners of Mumbai Airport. This means all employees must leave their houses, and the land will likely be redeveloped.

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Tough

After 68 years of government ownership, privatizing Air India was always going to be a challenging task. The carrier has accumulated assets around the country, including offices, plots of land, and hundreds of apartment colonies. With no buyer looking to purchase all of these non-airline assets, the government must find some way to recoup the billions in debt AI owes.

This will come in the form of monetizing the assets owned by Air India. With land in Mumbai being a scarce commodity, the 184 acres in Kalani are worth exponentially more than what AI has been paying as lease rental. However, this would mean displacing 7,000 Air India employees and uprooting a massive colony that features schools, an iconic cricket ground, and much more.

Air India A320 Getty
Divesting Air India is going to be a challenging process for the government. Photo Getty Images

The government has promised to fill in any shortfalls of the employees’ provident funds, the state-owned pension scheme. This means expensive post-retirement benefits will not be the burden of the new owner and will continue to belong to the government.

The coming months will see the government make further decisions about Air India’s future. With the process coming to a close in December, the time is ticking to decide what will happen to thousands of employees and assets.

What do you think about the government’s decision to hand over Air India colonies? Let us know in the comments.

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