Government to sell stake in Air India

The Indian government has approved plans to sell a stake in national carrier Air India.

Channel NewsAsia reported the country's Finance Minister, Arun Jaitley, as saying this week that the cabinet had given "in principle approval for the disinvestment" of the flag carrier. Jaitley will now head a group tasked with implementing the sale.

On the surface, Air India may not seem like an especially appealing investment opportunity. The debt-laden has been losing market share to rival airlines such as IndiGo, and now handles only about 12% of Indian traffic.

But the rapid growth of the Indian aviation sector could make investors more optimistic; India's domestic air traffic is increasing at consistent double-digit pace, and the tourism-friendly policies of Narendra Modi’s government are driving improvements in inbound and outbound travel. Air India also reversed a decade-long series of losses last year, when it achieved a rare profit.

But the desirability of any investment could depend on how much of Air India the government is prepared to sell. This has not yet been revealed.