Home / Companies / News /  Air India should be privatised: Economic Survey 2017

New Delhi: The government should privatise state-owned Air India Ltd, according to the Economic Survey 2017, which was presented in Parliament on Tuesday.

The survey said while the private sector has a major presence in civil aviation, telecommunications, and financial services segments, and this has served to reduce the share of public sector undertakings, the PSUs have not exited these segments.

“The most well-known example is the difficulty of privatizing public enterprises, even for firms where economists have made strong arguments that they belong in the private sector," the survey said.

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Air India, the only public sector airline in the country, was the focus of the survey in the sector. “Consider the civil aviation sector. Defying history, there is still the commitment to make the perennially unprofitable public sector airline “world class," the survey said.

Air India, which has the largest fleet of 140 planes in the country—including brand new Boeing Dreamliner planes—flies to 41 international and 72 domestic destinations. It is the biggest international carrier from India with a 17% market share and also controls 14.6% of the domestic passenger market.

The airline has so far received Rs23,993 crore of the Rs30,231 crore equity infusion promised by the government under a financial restructuring plan in 2012. The gross value of the airline’s fixed assets was Rs46,074.07 crore as of 31 March 2016, whereas its long-term borrowing was Rs35,806 crore, according to the aviation ministry.

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After a botched merger that was heavily criticized by the Comptroller and Auditor General of India, the airline’s losses have reduced and its industrial relations have improved in the absence of any major strike by its employees in recent years.

The airline reported a loss of about Rs3,587 crore in 2015-16 compared with a loss of Rs5,859 crore in the previous year.

The government has set a disinvestment target of Rs56,500 crore for the current financial year and so far around Rs24,000 crore has been mopped up through share sale and buy backs.

Last year, the government cleared the strategic sale of the state-owned helicopter company Pawan Hans Ltd that has a fleet of 46 planes.

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