Don’t privatise Air India, give it 5 years to revive, says parliamentary panel3 min read . Updated: 08 Jan 2018, 09:52 AM IST
The parliamentary panel says the government should review its decision on Air India privatisation and explore the possibility of 'an alternative to disinvestment'
New Delhi: This is not an appropriate time to go for Air India privatisation, which should be given at least five years to revive and its debt written off, a parliamentary panel is likely to tell the government.
The panel is also understood to have concluded that the equity infusion in Air India, as part of the turnaround plan, was made on a “piece meal basis", adversely affecting its financial and operational performance and “forcing" the airline to take loans “at a higher interest rate to meet the shortfall".
The Parliamentary Standing Committee on Transport, Tourism and Culture concluded that the government should review its decision to privatise or disinvest Air India and explore the possibility of “an alternative to disinvestment of our national carrier which is our national pride".
Observing that Air India has always “risen to the occasion" at times of need like calamities, social or political unrest in India or abroad, the Committee said “it would be lopsided to assess and evaluate the functioning of Air India solely from business point of view, as has been done by the NITI Aayog."
In its revised draft report on the airline’s proposed disinvestment, the panel noted that the TAP and financial restructuring plan (FRP) was for a period of 10 years from 2012 to 2022 and Air India has shown “an overall improvement in various parameters and every indication is that it is coming out of the red". “At the end of TAP period, government may evaluate the financial and performance status of Air India and take a decision accordingly," the panel said.
The parliamentary committee, after hearing the views of all stakeholders, “strongly feels that it will not be appropriate at this stage to disinvest when Air India has started earning profit from its operations." It also said that as some of its subsidiaries Air India Air Transport Services Ltd, Air India SATS Airport Services Pvt Ltd, Alliance Air and Air India Express were making profits, these units should “not be disinvested".
Strongly recommending that the airline’s debt “should be written off by the government", the revised draft report said, “Air India should be given a chance for at least five years to revive themselves". The tenure of five years indicates the end of the turnaround plan and FRP period in 2022. It said the airline’s debt was “due to policy directions of the ministry of civil aviation. Air India may be permitted to function as a government PSU with less government control".
The committee also expressed apprehension that Air India’s strategic disinvestment “would result in job loss of many people" and asked the government to “make an assessment" of the job loss before deciding on stake sale. “If the disinvestment of Air India and its subsidiaries is inevitable, the Committee emphatically recommends that the interests of employees should be protected," the revised draft report said. It asked the ministries of finance and civil aviation to “develop a strategic package to protect the rights and interests of officers and staff of Air India and its subsidiaries in respect of their pension, gratuity and VRS and also the wages of contractual workers engaged by government from time to time in case the disinvestment of Air India is inevitable."
The panel found merit in the views of some of its members that if Air India is withdrawn from the aviation scene, “private airlines would indulge in gouging and that (will not be) in the interest of the consumers." Air India has a total debt of about Rs48,877 crore at the end of March 2017, of which about Rs17,360 crore were aircraft loans and Rs31,517 crore were working capital loans.
The airline is expected to report a net loss of Rs3,579 crore for 2017-18, as per budget estimates projected for 2017 -18 from a provisional net loss of Rs3,643 crore for 2016-17. The airline is projected to increase its operating profit to Rs531 crore (BE projected) for 2017-18 from a provisional operating profit of Rs215 crore for 2016-17, as per latest figures tabled in Parliament.