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Govt's R1,200-cr equity support to Air India likely by month-end

india Updated: Aug 23, 2010 01:11 IST
HT Correspondent
HT Correspondent
Hindustan Times
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The government is likely to release the remaining R1,200 crore equity support to Air India owing to a good performance by the national carrier, which has witnessed a substantial increase in its revenues.

Sources said the state carrier's recent performance had come up for discussion when civil aviation secretary M Madhavan Nambiar met his finance ministry counterpart Ashok Chawla last week. The equity support is likely to be released by the end of this month and would be paid in three equal installments.

AI has already got R800 crore from the government. A group of ministers (GoM) headed by the finance minister had earlier approved the equity infusion.

The national carrier's revenues have shot up between April and August 15. Net revenues for the period stood at R4,290 crore — a jump of R608 crore (over 16 per cent) over the same period last year.

The combined average passenger carriage (the number of passengers carried daily on both domestic and international routes) has increased by 16.3 per cent from 38,497 (April-July 2009) to 44,790 (corresponding period this year).

The average passenger carriage on the domestic sector alone has grown by 26.3 per cent from 19,029 to 24,034 passengers daily during this period. However, the passenger carriage for international operations hasn't seen the same kind of growth. From 19,649 to 20,756 passengers daily, the growth is a mere 6.6 per cent.

The seat factor (occupancy) has increased by 5.3 per cent from 63.7 per cent in April-July last year to 69 per cent this year.

So, is the turnaround strategy finally working for the beleaguered national carrier?

"The performance is commendable considering the fact that air fares have remained the same, as they were the year before and AI has rationalised its fleet and routes," a senior AI official, who did not wish to be quoted, said.

However, aviation experts are not enthusiastic about the recent growth figures. "The upswing enjoyed by AI in recent times is primarily because of the overall upswing in the market. The growth is strong, yields are good and both domestic and international traffic is looking up and that explains the jump in revenue," Kapil Kaul, an aviation expert, said.

"As far as the turnaround plan is concerned, AI does not have a viable business model and would continue to face losses," he said.