Government ministers in India approved plans to privatise Air India, the debt-laden national carrier on Wednesday.
Faced with competition from budget rivals, the airline has struggled to make a profit.
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India’s finance minister Arun Jaitley said that the government had given an “in-principle” approval for the sale of Air India.
Jaitley will chair a committee to decide how best to attract lots of bidders as well as how much of the government’s stake will be sold.
The committee will also consider whether to write off some or all of Air India’s $8bn of debt.
Government officials said hopes are high that the Tata Group, a holding company headquartered in Mumbai, will buy out Air India.
The airline was founded by JRD Tata as Tata Airlines in 1932 and it became a public limited company in 1946.
The Indian government bought a 49 percent stake in Air India in 1948, and then fully nationalised the carrier 64 years ago in 1953.
Tata made a joint bid for the airline in 2001, but its partner in the deal Singapore Airlines pulled out at the last minute.
“The transformation process that we have under way for Air India includes governance, operating performance, fleet acquisition and ownership changes,” Jayant Sinha, India’s aviation minister, told the Financial Times earlier this week.
“We believe these will position Air India and the Indian aviation industry well for the future,” he added.
For the past five years or so, Indian ministers have been discussing ways to privatise Air India.
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The airline was given a $5.8bn bailout in 2012 and would have already gone under many years ago if it weren’t for taxpayer’s money.
Air India has made losses in eight of the last nine years.
The airline is India’s biggest international carrier and has 14.6 percent of the domestic air travel market.
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