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Air India revival: Aviation ministry expresses concern on privatization plans

LiveMint logoLiveMint 20-06-2017 PTI

New Delhi: A final decision on the revival plan for debt-laden Air India is likely to take some more time as the civil aviation ministry has voiced concerns over the privatization proposal, says an official.

The plan for revival would be taken up by the cabinet only after various issues, including the concerns raised by the parent ministry, are resolved, a senior finance ministry official said on Tuesday.

Surviving on taxpayers’ money, Air India has been in the red for long and various proposals, including government think tank NITI Aayog’s suggestion for complete privatization, have been made. The civil aviation ministry has however voiced concerns over privatizing the airline citing issues such as those related to debt burden, proposed voluntary retirement scheme for employees and fleet, he said.

While discussions are still going on, at least two different views have emerged within the government with respect to stake sale in the airline. One view is that the government should offload majority stake in the airline and retain the minority stake as well as the Air India logo, the official said. This could be done after taking over a portion of its debt, he added.

Another idea being floated is for minority stake sale by the government and then work on ways to address the debt woes, including by way of selling the airline’s assets. The aviation ministry is in favour of reviving the airline, which has debt of more than Rs52,000 crore, but not keen on majority stake sale, the official noted.

Air India is surviving on a Rs30,000-crore bailout package extended by the United Progressive Alliance (UPA) in 2012. As part of efforts to reduce its debt, the government might also nudge Life Insurance Corp. of India Ltd (LIC) and other public sector enterprises to buy certain non-core assets of Air India.

The larger question before the government is whether there is a need for a state-owned carrier and if it is to be there, whether the current operational structure should be revamped or not, the official said.

Besides, he said, there would be problems in attracting buyers for the airline as there are not too many deep-pocketed domestic entities and stake sale to a foreign investors could trigger a lot of opposition.

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The matter relating to Air India is now at the level of Prime Minister’s Office (PMO) and once the issues are resolved between the ministries, the final proposal would be taken to the cabinet, the official said. It would take a few more weeks before the plan is finalised, he added.

Earlier in the day, minister of state for civil aviation Jayant Sinha said inter-ministerial consultations on the future course of action for Air India have been completed, and the cabinet would decide on how best to move forward. Recently, finance minister Arun Jaitley had said the aviation ministry has to explore all possibilities “as to how the privatization of Air India can be done”.

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