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Govt may let a privatised Air India retain national carrier status: Arun Jaitley

LiveMint logoLiveMint 01-08-2017 Asit Ranjan Mishra

New Delhi: The government is contemplating to retain the national carrier status of Air India while privatising the debt-burdened airline, finance minister Arun Jaitley said in Lok Sabha on Tuesday. This is expected to significantly increase the valuation of the airline as national carriers get preference while signing bilateral flying contracts with other countries.

Replying on a discussion on supplementary demands for grants for 2017-18, Jaitley said it is no longer feasible to keep collecting tax from public to fund a public sector airline in a competitive environment where it has just 15-16% of domestic market share. “Today, the debt of Air India is up to Rs50,000-55,000 crore. This is not a small amount. So in what way the national carrier status of Air India could be preserved so that it remain a major competitor with change in management and shareholding pattern. The government will take an appropriate decision what to do with Air India in a competitive environment,” Jaitley said.

Air India has the first right of refusal on international flying rights as a designated national carrier.

Jaitley said it is in government’s interest that employees retain their jobs. “But we must not create a situation which leads to not being able to save the existing jobs, because if we keep running it as a government department rather than a commercial establishment, then let alone create new jobs, we will not be able to save some of those jobs,” he added.

An inter-ministerial panel headed by Jaitley is currently considering various options to deal with the high level of debt of Air India before selling it off. Air India has valuable real estate, bilateral flying rights and sought-after overseas airport slots.

IndiGo (InterGlobe Aviation Ltd), the largest airline in the country, has publicly expressed interest in Air India, while the Tata group, which started the airline in 1932 before it was nationalized, has also sought details from the government in informal conversations, Mint reported on 20 July.

The airline has so far received Rs23,993 crore of a Rs30,231 crore equity infusion promised by the government under a financial restructuring plan in 2012. It reported a loss of about Rs3,587 crore in 2015-16, compared with a loss of Rs5,859 crore the previous year.

NITI Aayog, the government think tank, had cited Air India’s “fragile finances” as the main reason for recommending the airline’s disinvestment on 12 May.

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