Civil Aviation Minister Praful Patel is hoping for a turn around of sector, which is going through “turbulent times”.
The minister said the government will infuse fresh equity to the tune of Rs 1,500 crore in Air India and will also extend a soft loan of Rs 2,000 crore to help the airline sail through turbulent times.
Patel said bad times are not here to stay and added that from one airline monopoly the country has come a long way with addition of aircraft and airlines.
Speaking exclusively to Hindustan Times, the minister, dwelled on several issues ranging from the most recent “operational tie-up of India’s leading private sector airlines, Jet Airways and Kingfisher Airlines to how the industry would come out of the current crisis.
Whether the Jet-Kingfisher “operational tie-up” is a cause for concern for state-owned carrier Air India, Patel said, “Air India is a formidable airline. It has been competing and will continue to compete with other players in the aviation space in the country. These are not new players that has just come into being. Any kind of competition is healthy.”
Patel admitted that the state run carrier is not in the pink of financial health.
“The government would infuse fresh equity in the airline if needed which could be to the tune of Rs 1,500 crore and it is not fair to expect an airline with an equity base of Rs 145 crore to go in for an acquisition worth Rs 44,000 crore,” Patel said.
Patel added that the government would talk to financial institutions including private fund houses for fresh equity for the airline.
“Yes, we will talk to private equity firms also,” he said.
Air India is buying 111 aircraft to augment its fleet. The deliveries of which have started and expected to be completed by 2012.
The government is also likely to extend a soft loan of Rs 2,000 crore to Air India to meet its working capital requirement. The soft loan among things, Patel said, would be utilised by Air India to upgrade its information technology infrastructure upgradation as the airline is all set to join the elite Star Alliance.
While ruling out the possibility of a listing on the stock exchange for fresh equity, Patel said “the time is not right”.
On being asked if the operational alliance between Jet and Kingfisher would lead to cartelisation, Patel said, “If the operational alliance is well within the norms laid out by the Directorate General of Civil Aviation we have no issues.”
“At least let them start the process,” Patel added.
Regarding laying off 700 employees by Jet Airways and another 300 by Kingfisher airlines, Patel said human resource was not under the domain of the ministry of Civil Aviation.