Despite being the ninth biggest aviation market, India is the world’s least tapped market. That’s Civil Aviation Minister Praful Patel speaking to Hindustan Times over lunch on issues ranging from restructuring Air India (AI) to taxes on aviation turbine fuel (ATF) and high airport charges. Despite the downturn, he’s upbeat about the sector, particularly its role as an employment generator. Excerpts:
On privatising AI
We will not privatise AI but we are not averse to a strategic partner. We will offload some equity in the airline. I have always told people in AI that they would have to work very hard. I have told them you either perform or perish, but perish is not an option.
On bailout for AI
AI has been under intense scrutiny and I do not subscribe to the word ‘bailout’ as the government has never spent a rupee for the airline. But the government being the owner of the airline has a duty to see it perform. AI was on the sale list of the erstwhile National Democratic Alliance government.
On the AI-Indian Airlines merger
A well-intended merger process has landed in internal bickering. The government had planed an internal public offer for AI and Indian Airlines in 2006. But both had a negative net worth and the consultants suggested that we merge them for better valuation. The airlines were merged on lines of Singapore Airlines and Lufthansa to create strategic business units (SBUs) so that these units could generate profits for the airline but that failed to happen.
On AI workforce
Workforce is certainly an issue. The airline is overstaffed by 30-40 per cent and we wanted to deploy the extra workforce to the SBUs but that is yet to work out. We will not reduce the workforce in the airline but will deploy them to areas where we are short-staffed.
On AI’s debts
Every company goes for debt restructuring. AI’s debts of Rs 16,000 crore are being reworked and on being done it will save the airline nearly Rs 800 crore per year.
On reducing ATF prices
A group of ministers, headed by finance minister Pranab Mukherjee, has been constituted to look at the issue of high price of ATF. High jet fuel prices are leading the industry towards sickness. The ministerial panel is expected to decide in the next three months.
On states’ response on ATF
I have always impressed upon the states to bring down taxes on ATF as it would only help the states generate greater revenues and make airlines competitive. ATF touched an all-time high of Rs 71,000 per kilo litre in 2007. That shook the foundation of the civil aviation sector and the high prices were passed on to consumers. That’s when the airlines started losing passengers.
On the health of airlines
The industry is the first to be affected whenever there is a slowdown, a terror attack or the spread of an epidemic, as travel goes down. I have been speaking to corporate house and all of them including Infosys, Reliance and Wipro have drastically cut down travel. Corporate and business travel has gone down by as much as 50 per cent. Coupled with the epidemic scare this has dealt a body blow to the airline industry.
On bailing out private airlines
We cannot bail out private airlines. In AI’s case, the government is the owner. In Kingfisher’s case Vijay Mallya is the owner and in case of Jet Mr Naresh Goyal is the owner and they will have to pull their airline out of the red.
On high airport charges
I can cite 10 examples of airports that are more expensive than airports in India and 10 that are less expensive. Airport charges do not have a huge impact on the profitability of airlines. The airport development charges are being levied from passengers for the facilities that they will get. However it is still being debated if these charges should be levied once the facility is in place or they should be charged when the airport is under construction.