A strategic partner for AI, who owns 25 per cent of its stake, would "simply use India as a feeder, use its rights to gain a foothold here and strive to kill IA's domestic network," the planners, requesting anonymity, said.

"Larger the stake, larger would be the interest of a strategic partner to see that AI flourished," these officials said, adding any world-class foreign airline with only 25 per cent shares would be interested "only in harvesting and feeding its own carrier" instead of investing in AI's fleet, infrastructure and facilities.

Agreeing with these officials, aviation industry sources said with greater equity participation, the strategic partner would like to have management control as it would like to be party in major decisions which would determine AI's future investment and direction of business.

A private airline instead would try to channelise AI's in-bound traffic onto its own network, influence its business direction to its own benefit, share experience and resources and promote its operations abroad, they said.

Apparently owing to differences over the quantum of shares to be given away to the strategic partner, the Cabinet Committee on Disinvestment (CCD) earlier this week deferred till mid-May a decision on divestment of Air India, besides other public sector units like Indian Oil Corporation. The officials quoted recommendations of the Prime Minister's Council on Trade and Industry, which was submitted on Saturday, as saying that government should retain only 26 per cent of stakes in the PSUs. The Council, in its report by industrialists GP Goenka, Nusli Wadia and Rajeev Chandrashekhar, said "there is no reason why Centre's equity should not be brought down to 26 per cent and this includes banking, insurance, aviation, the petroleum sector and tourism".

"Twenty-six per cent equity is enough to ensure the Government has some influence over decision-making. The only caveat to 26 per cent can be if prior privatisation of management enhances valuation," it said, adding "the block of assets must be sold. Whether the enterprise will continue to be a going concern or not, is for the new management to decide".