Home >Politics >Policy >Centre committed to privatize Air India soon, govt tells Rajya Sabha
The government last year failed in its attempt to sell a 76% stake in Air India due to a lack of interest from bidders (Mint file)
The government last year failed in its attempt to sell a 76% stake in Air India due to a lack of interest from bidders (Mint file)

Centre committed to privatize Air India soon, govt tells Rajya Sabha

  • Civil aviation minister Puri said the govt was looking to make the carrier more ‘viable, revive it and disinvest it’
  • Air India had already incurred a debt of 59,000 crore, out of which the Centre had proposed to retire 29,000 crore in special purpose vehicles

New Delhi: The Centre remains committed to privatizing debt-laden national carrier Air India Ltd soon, civil aviation minister Hardeep Singh Puri said in the Rajya Sabha on Wednesday.

Responding to queries from a law maker, Puri said Air India was incurring losses of 15 crore a day, and, therefore, the government was attempting to make the carrier more “viable, revive it and then disinvest it".

Air India has become a liability to the exchequer in a highly competitive air travel market, incurring losses year after year and forcing the government to regularly infuse taxpayer funds.

Last month, Puri told the Lok Sabha that in FY19, the airline had incurred losses of 7,635 crore and received a fund infusion of 3,975 crore. Air India had incurred losses of 5,374 crore on an average in the preceding four years, he had said.

The carrier had a debt of 58,352 crore at the end of FY19, about half of which was transferred to a special purpose vehicle (SPV), Air India Asset Holding Ltd (AIAHL), which was set up in January 2018, as part of a financial restructuring plan for the flag carrier. The government had transferred debt of 29,464 crore, as well as non-core assets, and non-operational assets of Air India to the SPV.

An attempt to sell a 76% stake in Air India last year did not materialize as investors were apprehensive about the government retaining a minority stake in the carrier.

The domestic aviation industry has been going through a rough patch, with intense competition and volatility in jet fuel price and currency movements affecting the financial health of airlines. Airlines have been demanding inclusion of aviation turbine fuel under the goods and services tax (GST) for tax relief. At present, jet fuel attracts excise duty, for which airlines do nort receive any rebate on the GST levied on air transport services.

Puri expressed confidence that the airline may end 2019-20 with profits and, thereafter, would be divested. “There has been a steady improvement in Air India’s finances. It is my expectation that in the current financial year, we are hoping to make a profit. But the year that has concluded the figure shall show a loss."

The minister said despite Air India’s improved finances, there are certain external factors such as closure of the airspace over Pakistan, which have affected its profitability. Responding to another query on airfares, the minister said the disruption in domestic air travel due to the grounding of Jet Airways (India) Ltd has been almost completely corrected. Airfares on trunk sectors, including Delhi-Mumbai, with an average of 5,100, has not increased in 20 years. “That was the fare in 2001, that was the fare in 2011 and now," he said.

PTI contributed to this story.

Also read: Opinion | Reset Air India for take-off

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