Air India Privatisation? Aviation Ministry In Process Of Preparing Cabinet Note

The civil aviation ministry is in the process of preparing a Cabinet note to decide on the future course of action for loss-making Air India, including possible privatisation.

When asked about the ministry's view on the possible disinvestment of Air India, Minister of State for Civil Aviation Jayant Sinha on Tuesday said, "We are in the process of preparing a Cabinet note". The Cabinet would take it up for consideration very shortly and that would initiate the entire process, he said without providing any specific details on the future course for the airline.

Finance Minister Arun Jaitley has pitched for disinvestment of Air India and government think-tank NITI Aayog has also submitted its recommendations on making the carrier strong and viable. Last week, Jaitley and his Civil Aviation counterpart Ashok Gajapathi Raju discussed the future course for debt- ridden Air India. According to the ministry, all options are being considered for the national carrier.

"NITI Aayog has given its suggestion to the civil aviation ministry...civil aviation has to explore all the possibilities as to how the privatisation of Air India can be done," Jaitley had said last week.

Staying afloat on little over Rs 30,000 crore bail-out package extended by the previous UPA regime, Air India is saddled with nearly Rs 50,000 crore debt and is in discussions with lenders on ways to restructure the loans. Since the merger of Indian Airlines with itself, Air India has been in the red. However, it posted an operational profit of Rs 105 crore on account of low fuel prices and increased passenger numbers in 2015-16.

Also Read: Modi Said to Consider Privatizing Indebted Carrier Air India

UDAN-Like Connectivity For BIMSTEC Nations?

Sinha also proposed an air connectivity scheme on the lines of the UDAN scheme to connect smaller towns across the BIMSTEC region.

He also added that such a move will have to be supplemented by an agreement such as the Open Sky Agreement that India has with other SAARC nations as well countries located beyond a 5,000-km radius from New Delhi, allowing unlimited number of flights to six metro airports. Sinha was speaking at a curtain raiser to mark the 20th anniversary of BIMSTEC or Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation. The grouping includes Bangladesh, India, Myanmar, Sri Lanka, Thailand, Bhutan and Nepal.

"It is worth considering whether we can work with countries that are in the BIMSTEC to see whether we can create a policy package that will enable us to connect smaller towns across the entire BIMSTEC region," Sinha said.

He added that no formal talks on the matter had taken place with any of the BIMSTEC nations and this was merely an "an informal suggestion" being floated for debate and discussion.

Sinha also said that in order to execute such a scheme India will have to enter into an agreement with various countries to provide financial aid.

"We can sign an MoU with different countries to be able to provide support for an UDAN-type scheme across the BIMSTEC community. Of course, we will have to couple that with something like an Open Sky Agreement so that airlines can fly freely," Sinha told reporters.

The Centre's Ude Desh ka Aam Nagrik (UDAN) scheme aims to boost air connectivity to tier-2 and tier-3 cities and make flying affordable for the masses by capping airfares at Rs 2,500 per hour.

The first flight under the scheme was launched on Delhi- Shimla route in April after as many as five airlines won 128 routes as part of a bidding process.

The government provides selected airline operators a subsidy to keep the fares low for passengers.

Also Read: UDAN Still Waiting To Take Off Three Months After Launch