The government is considering selling state-owned Air India in parts to make it attractive to potential buyers, as it reviews options to divest the loss-making flagship carrier, several government officials familiar with the situation said.

Prime Minister Narendra Modi's cabinet gave the go-ahead last month for the government to try to sell the airline, after successive governments spent billions of dollars in recent years to keep the airline going.

Air India - founded in the 1930s and known to generations for its Maharajah mascot - is saddled with a debt burden of $8.5 billion (approx. Rs. 55,000 crore) and a bloated cost structure. The government has injected $3.6 billion (approx. Rs. 23,200 crore) since 2012 to bail out the airline.

Once the nation's largest carrier, its market share in the booming domestic market has slumped to just 13 per cent as private carriers such as InterGlobe Aviation's IndiGo and Jet Airways have grown.

Previous attempts to offload the airline have been unsuccessful. If Prime Minister Modi can pull this off, it will buttress his credentials as a reformer brave enough to wade into some of the country's most intractable problems. His office has set a deadline of early next year to get the sale process underway, the officials said, declining to be named as they were not authorised to speak publicly about the plans.

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