House panel may tell govt not to privatise AI, give 5 years for revival

NEW DELHI: This is not an appropriate time to divest government stake in Air India (AI), 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 the national carrier, as part of the turnaround plan (TAP), was made on a “piecemeal basis”, adversely affecting its financial and operational performance and “forcing” the airline to take loans “at a higher interest rate to meet the shortfall”. In a bid to revive the embattled national carrier, the government in June last year initiated a process for its strategic disinvestment. Air India had received about Rs 26,000 crore under a bailout package sanctioned by the previous UPA government. It had a total debt of about Rs 48,877 crore at the end of March 2017.

The Tata group, Singapore Airlines and IndiGo have expressed interest in the airline.

The Parliamentary Standing Committee on Transport, Tourism and Culture concluded that the government should review its decision to privatise or disinvest AI and explore the possibility of “an alternative to disinvestment of our national carrier which is our national pride”.

Observing that AI 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.”

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 AI has shown “an overall improvement in various parameters and every indication is that it is coming out of the red”.

The committee said AI subsidiaries Air India Air Transport Services Limited, Air India SATS Airport Services Private Limited, Alliance Air and Air India Express were making profits, and 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 TAP and FRP period in 2022.

The report 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 the airline’s strategic disinvestment “would result in job loss of many people”.

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”.

THE COMMITTEE ALSO EXPRESSED APPREHENSION THAT THE AIRLINE’S STRATEGIC DISINVESTMENT “WOULD RESULT IN JOB LOSS OF MANY PEOPLE”.