The global backdrop
Over most of the last two and a half decades, the aviation sector world-wide, has substantially moved away from government control and ownership towards deregulation and private ownership.
The origins of this trend can be traced back to the deregulation of the United States' airline industry in the late 1970s, which led to lower fares and higher improved productivity of assets and capital.
This transformation also subsumed another trend of privatisation of government owned airlines designated by a country's government to operate international air services to and from that country as evidenced in Australia (Qantas Airways), the United Kingdom (British Airways), Germany (Lufthansa) and Japan (Japan Airlines).
The Indian backdrop
The Indian aviation sector was also characterised by a high degree of Government control prior to 1990. The Government of India nationalised the airline industry in 1953 through the enactment of the Air Corporations Act. Pursuant to this Act, there were only two players left in the Indian aviation sector, both of which were owned and controlled by the Indian government.
Indian Airlines was earmarked to primarily serve the domestic sector alongside operations to a few select international destinations while Air India served the international sectors.