No danger of Air India debt turning into NPA: Civil aviation secretary

New Delhi: The government has agreed to make a fresh equity infusion of ₹ 860 crore in Air India Ltd and provide a sovereign guarantee to the loss-making airline to raise up to ₹ 2,100 crore. This is over and above the airline’s turnaround plan approved in 2012, said Rajiv Nayan Choubey, secretary in the civil aviation ministry. The rationale is to turn around the airline as the government does not want its value to erode, he added.

Choubey also said the Navi Mumbai airport will now get functional only by September 2021, against 2019 as expected before. Edited excerpts from an interview:

Why do you want to turn around Air India spending taxpayers’ money when the ultimate aim is to sell it off?

We want to turn around the airline as we don’t want value erosion (of Air India) to happen. When the environment improves, oil prices come down, and we want to sell Air India, the value of the airline should not have eroded. At present, our primary focus is to work out necessary support measures for Air India, which we are working on.

What’s the update on the government’s plans on a new turnaround plan for Air India and to permit domestic airlines to raise external commercial borrowings for working capital purposes?

The SPV (special purpose vehicle) which will house the airline’s debt has been created. The new turnaround plan for Air India should get cleared by end of this month. We will take a call whether this can be done bilaterally between aviation and finance ministries or we have to go to the cabinet for approval.

A recent report by CAPA India states that all Indian airlines, including Air India, are looking at expanding fleet.

There have been no such proposal we have heard of from Air India’s board on its plan for expanding fleet. Among the aircraft which have already been ordered by the airline earlier, a few last ones are coming in by March 2019. But, apart from that, there are no plans for new aircraft. Even the Boeing 787 (Dreamliner) order has been fulfilled.

Reports state that Air India has delayed paying several of its vendors and even loans...

There is no such danger of Air India’s loans to turn into NPA (non-performing asset). Vendor dues are taken care of. Air India has had discussions with suppliers and vendors and has sorted out those issues, based on the cash flows.

Qatar Airways’ chief executive Akbar Al Baker says that the rule for foreigners to own 100% in an Indian airline is not clear.

The current policy of the Indian government is that the substantial ownership and effective control of an Indian airline should remain with Indian nationals and they will have to comply. You cannot have substantial ownership of more than 50% (by a foreign airline) because then you are violating the policy. If they think that they should have an airline that is entirely owned by Qataris, presently it is not possible. But, if they think that they can run an airline that is 49% foreign-owned and 51% Indian-owned, that is possible. They will have to find an Indian partner and it is possible.

Jayant Sinha, minister of state for civil aviation, had earlier said the government is looking at a wide range of financial instruments for the sector, which is facing headwinds due to high costs.

We have had separate discussions with other ministries, including finance ministry, on what kind of support we can provide (to airlines) in view of the fact that there has been some deterioration on macro side relating to crude price and foreign exchange.

A fall in rupee hits us badly as all our aircraft leases are on dollar terms. And our operating costs are hit by the rise in fuel prices. I am unable to give exact details right now because it is a work in progress. But, we are in discussions with the ministry of finance regarding this.

India’s bilateral rights (for seats) with several nations have been exhausted or are on the verge of exhaustion. What is the government doing about it?

Wherever there is a need to look at bilateral rights, and it is the requirement of our (Indian) airlines, we will work towards providing with the needful. However, the issue with bilateral is that if it benefits a foreign country more than our country. Bilateral must be reciprocated in both letter and spirit. We are in constant talks with other governments regarding this.

When is the first phase of the Navi Mumbai airport expected ?

We recently had a meeting with the relevant authorities on the progress of the Navi Mumbai airport. The first flight should happen in the next three years by September 2021.

When will in-flight connectivity become a reality?

The Telecom Regulatory Authority of India has already given its recommendations regarding this.

We met stakeholders—airlines, telecom service providers—and we along with the department of telecommunication have decided on a roadmap. The matter will be taken internally by a committee of secretaries, chaired by the cabinet secretary. We expect this process will be completed by October.

Once that is done, tender applications will be invited. DoT has identified in-flight connectivity as a separate service which would require licensing from DoT. They will be inviting applications for this license from October.