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‘Determined to privatise Air India’: Hardeep Singh Puri
The government’s biggest attempt to privatise Air India ended on May 31, 2018, as a deadline for prospective bidders lapsed with no one showing interest in the airline.
The National Democratic Alliance (NDA) government, three months into its second term in office, is determined to privatise debt-laden and loss-making Air India, civil aviation minister Hardeep Puri said on Thursday, more than a year after the first attempt to sell the state-run airline flopped.
“It should be a total privatisation, we have to get the best possible deal and we have to get in the shortest time available,” Puri told reporters on Thursday. “People are interested in acquiring Air India, it’s a first rate airline, whoever acquires it will be very fortunate.”
The government’s biggest attempt to privatise Air India ended on May 31, 2018, as a deadline for prospective bidders lapsed with no one showing interest in the airline. Under that plan, the government had proposed retaining a 24% stake in the airline and remaining active as a minority investor, triggering concern of continued state interference.
Air India has about Rs. 55,000 crore of debt on its books and made a loss of Rs.4,000 crore in 2018-19 . Oil companies have stopped fuel supplies to the airline at six airport, and Air India has no money to pay salaries to its staff beyond October
Puri said the government will give letter of comfort to the oil companies to resume fuel supply to Air India at the six airports.
The chairman and managing director of Air India, Ashwani Lohani, admitted that financials of the airline hadn’t been very sound. Operational losses, however, have declined and the airline is looking at a decent operational profit this year, he said.
“Load factor has also increased to 82% and we should post hefty operational profit this year. We have legacy issues, issues related to merger {with Indian Airlines in 2007}, some we have solved while some are insolvable. But despite trouble, we are looking at launching new flights, improving first class, promoting tourism and offering special packages,” Lohani said.
With a revenue target of ~31,000 crore this financial year, the national carrier is targeting an operational profit of ~1000 crore at the least.
Puri said Air India was a first-class airline with a very good safety record.
“Having said this, you might ask why we are determined to privatise it. Answer is very simple; I personally believe that government should not be in the business of running airlines. Government’s determination to privatise Air India is a given, it’s undiluted. The procedure involves the formation of an alternate mechanism which is the GoM (group of ministers) and my submission to you is that has been formed. Before you reach that level, there has to be a meeting at the cabinet secretary level to prepare the ground, that meeting has taken place and we will have GoM meeting in next few days,” Puri said.
Reconstituted after the NDA returned to power in May, the group of ministers (GoM) is likely to meet next week to decide on the modalities of sale of the state-owned airline. The government is likely to go for a 100% sale this time, people in the civil aviation ministry said on condition of anonymity.
The GoM comprises home minister Amit Shah, finance minister Nirmala Sitharaman, commerce and railway minister Piyush Goyal and civil aviation minister Puri. The panel, named Air India Specific Alternative Mechanism (AISAM), is likely to meet next week following which a Request for Proposal (RFP) by potential bidders will be issued.
