The iconic Air India building on Queen’s necklace in Mumbai may be consumed by the survival woes of the national carrier. A plan is under way to sell the 23-storey prime property to raise funds for the cash-strapped airline. Sources said the shipping ministry is considering a proposal to buy the premium real estate.

“The proposal has been presented to the shipping ministry. There are 12 major ports under the shipping ministry, which have sufficient cash reserve. This can be used to buy the Nariman Point property,” a source said. The source further said the proposal was mooted following a directive from the prime minister's office (PMO) a few days ago. It was discussed in the parent aviation ministry with Air India officials and taken forward.

The shipping ministry is examining the possibility of making an outright purchase or leasing the building out on long-term agreement. A final decision would be taken after discussions with the chiefs of major ports.

Major ports have been posting steady growth in cargo handling and have a combined net surplus of Rs 2,820 crore as on March, 2017. “Since the transaction would take place between government agencies, it will not be questioned by CVC, CBI or CAG. In case it is given to a private company, even through proper tendering, questions would be raised,” one of the sources said. An e-mail query on the proposed move sent to junior aviation minister Jayant Sinha and separately to aviation secretary RN Choubey did not receive any response till going to the press.

Sources in Air India said that the Nariman Point building could be valued at Rs 2,000 crore, but questioned the proposal saying that it is not a dead asset. The building has been earning good money for the airline. “The annual income is about Rs 90 crore-Rs 100 crore from the building. There is no reason why it should be sold or given away to some other government department,” he said.

The national carrier earned Rs 291 crore as lease rental from its prized Nariman Point building between 2012-13 and January 2018. In all, Air India monetised a sum of Rs 543.03 crore from its fixed assets during this period.

“Normally, when government sells an asset it goes through the auction process. In this case, the shipping ministry may be looking for space and a government-to-government transfer is being considered. Government departments are also expanding and they need space. In this case, Air India does not need space while shipping ministry probably needs more office space,” said Anshuman Magazine, chairman, India & South East Asia, CBRE South Asia.

Earlier, in a major blow to the Modi government's disinvestment plan, no takers came for acquiring 76 per cent of the airline's stake on offer. This forced the government to call off the selloff plan for now and wait for the investor sentiment to improve. Saddled with a debt of Rs 50,000 crore, Air India has been surviving on taxpayer money since 2012.