NEW DELHI: After the government failed to receive any bids for its stake in state-run carrier Air India , the sale is likely to be put off. Most prospective bidders found the terms of sale too challenging. There were several daunting conditions. The government would have retained 24 per cent stake and the winning bidder was required to stay invested in the airline for at least three years. The winning bidder could not merge the airline with existing businesses as long as the government held a stake. The buyer was required to list Air India. It had to carry the responsibility of a huge work force that comes with Air India, having little scope to prune it.The government will have to launch the sale again soon with attractive conditions because it just cannot wait. Continuing under government ownership will lead either to an indefinite drain on the exchequer or to the closure of the airline at a great cost to employees, taxpayers, and the economy, according to Centre for Asia Pacific Aviation ( CAPA ) India, an aviation advisory and research firm. Delaying the sale or putting it off till the next government is elected at the Centre is clearly a big risk.CAPA says the government now needs to pursue divestment with even greater determination, in part because the alternative is far worse. It has listed eight reasons why the government cannot delay the sale of its stake in the national carrier.Air India is expected to lose a total of $1.5-2.0 billion over the next two financial years, namely FY2019 and FY2020: These losses will need to be funded by the taxpayers. And this is in addition to the $4 billion of public funds that have been used to subsidise the airline since 2012. In fact, it is due to the billions of dollars infused to date and other perceived risks, that the government is faced with a delicate balancing act, as is evident from the terms in the EoI. Taking a more significant haircut than was planned in the EoI will be politically sensitive, but the alternative is to keep pouring more money into the airline indefinitely. The government needs to be prepared to take a bold decision on this for the long-term benefit of public funds.The carrier’s debt burden will continue to increase further: Air India’s debt stands at $7.5 billion and the outlook for the airline suggests that this will continue to rise.Air India’s domestic market share is expected to drop below 10%: India’s carriers are scheduled to take delivery of an unprecedented 120-125 aircraft in FY2019 alone, and more than 500 over the next five years. Most of these deliveries will be deployed in the domestic market. Air India has plans to induct just nine aircraft, on lease, primarily for replacement rather than expansion. As a result, Air India will continue to lose market share and relevance, dropping well below 10%.Air India is expected to lose its mantle as the largest international operator: With IndiGo and Vistara both set to announce wide-bodied aircraft orders in the next few weeks, and SpiceJet also planning to take wide bodies on lease, the international long-haul market will become increasingly competitive. Jet is also expanding overseas, strengthening its partnerships, and evaluating a new aircraft order.Air India’s position as the largest carrier on international routes will come under severe pressure. And this in an environment where most of the largest foreign carriers are bilateral constrained. However, we expect that the government will relax the current bilateral policy settings in the near term to support inbound tourism, which will further intensify competition. In the longer term, Air India could be significantly marginalised on international routes as well as domestic.Air India Express’ financials are expected to deteriorate in the face of LCC expansion. Air India’s low-cost subsidiary has been a solid performer over the last couple of years, but will face increased competition on regional international routes as AirAsia India GoAir and Vistara all plan to launch overseas services for the first time, in the coming months. At the same time, IndiGo plans to deploy A321neo LRs on international routes while SpiceJet will be inducting 737 MAX 8s and 10s, providing them with lower unit costs. The planned expansion by Indian LCCs is potentially likely to happen from those airports where Air India Express has traditionally had a strong presence.Subsidiary units such as ground handling will come under pressure. The implementation of the new ground-handling policy will see competition intensify as additional concessions are awarded at key airports. The Airports Authority of India has this week commenced a tender process for new concessions at 37 airports. This is expected to erode the value of Air India Air Transport Services Limited.Air India could experience a brain-drain of skilled resources. With the rapid pace of growth of Indian aviation, skills shortages are emerging across the industry, particularly for commanders, but also engineers and management. Continued uncertainty about the future of the airline may precipitate an exodus of valuable human resources.