Air India is losing up to Rs 80 crore (Rs 800 million) annually due to its indecision to lease floor space in its iconic Nariman Point building, according to leading property consultants.

Air India's indecision comes at a time when the government carrier has a working capital debt of Rs 18,000 crore (Rs 180 billion) and growing interest and operating costs have put strain on the airline.

It has been unable to pay salaries on time.

In a recent letter to the government, the management warned it could default on interest payment on foreign loans to purchase aircraft and its dues are over Rs 4,500 crore (Rs 45 billion).

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Property experts find it baffling that Air India continues to under-utilise its ground-plus 22-storey building in Nariman Point, central business district in Mumbai, which has one of the highest office rentals in the world.

Air India occupies six floors and three of these have been leased out.

The rest are largely unused.

Nariman Point and adjoining areas have six million sq ft office area of which 0.8 million sq ft is vacant.

Of the total vacancy, one eighth or 0.1 million sq ft is vacant in Air India Building, say property consultants.

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"Air India owns collector leasehold rights to the most strategically located and prominent building along Marine Drive.

It measures approximately 220,000 square feet and can earn up to Rs 80 crore of rentals per annum -- a reasonable figure if one calculates as the standard rental rates of Rs 300/sq ft for this location (this would include net rent after maintenance and property taxes).

"If monetised for capital value, this building can fetch up to Rs 800 crore (Rs 8 billion),'' Sanjay Dutt, CEO of property consultant, Jones Lang Salle wrote in a blog on Wednesday.

"We have been trying to lease the space for some time, but we would not know by when it would be made available. It is uncertain," said Raja Seetharaman, national head of agency leasing at JLL.

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"If Express Towers in the neighbourhood can earn Rs 325 per square feet, Air India building can easily get Rs 275-Rs 325 a sq ft if the company wishes to lease it," he said.

According to a head of real estate unit, a local broking firm, excessive bureaucracy and red tape have kept tenants away.

Each bid to lease the space go through multiple levels of hierarchy and the entire process could takes 60-90 days to complete, irrespective of whether it is eventually accepted or not, he said.

"If you go to any other private developer, you can conclude the deal in one sitting, but it is rarely possible in Air India's case.

"They must understand that it is a buyer's market," he added.

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"Several corporates, banks and financial services firms are moving to the suburbs and leasing their properties at Nariman Point.

"They can pay rent of Rs 100 per sq ft in some Mumbai suburb and can earn Rs 300 per sq ft at Nariman Point. That is how they maximise profits," said Ashok Kumar, principal & managing director, Cresa Partners India, a corporate realty services firm.

The Air India management has decided to monetise its real estate in India and abroad and hopes to earn Rs 5,000 crore over 10 years  through sale or lease.

However, the airline has not taken a decision yet with regard to AI building, a source said.

There is a sense within the airline that even if it leases or sells space in the building, it is not sufficient to cover up the losses.

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"Monetisation of assets is a part of Air India's turnaround plan, approved by the board on March 15. We recently sold a flat in Paris,'' an AI spokesperson said in an email response.

He did not give details on the floor space AI was looking to sell or lease in market.

The AI building was constructed in the mid-1970s.

Since the company did not need so many floors, it rented the office space to companies.

Initially, as part of its rent arrangement, AI paid electricity dues of its tenants and soon realised it was paying more than the rent it collected.

With contributions from Taghavendra Kamath & Masoom Gupte