Nobody wanted to buy Air India because of its huge debts. The answer is simple enough when you’re state owned. The government simply removed the debt and announced the airline is for sale, with no obligations or debt at all.
It’s not something the Indian government wanted to do, but nobody was willing to buy so much airline with so many problems and a vast debt on top of that.
Air India is notorious for stripping nearly new aircraft of parts to keep others flying, and its reputation is far from brilliant.
Ironically, JetAirways was and still is, it’s primary full service rival, but how that company fares with its debts and financial crisis is hard to fathom.
The crisis for India’s two most venerable airlines, has been all about the failure to change and engage the low cost airlines that have taken the country by storm.
In any other country bankruptcy and reorganisation processes would have kicked in, but India doesn’t have a legal state of bankruptcy/administration/Chapter-11 system.
With the collapse of Kingfisher several years ago demonstrating what a dire mess is left behind, as a company simply seems to dissolve with no real idea who is legally responsible.