‘Disinvestment later, we will first position AI as great global airline’
The civil aviation ministry wants to strengthen Air India before restarting the process of privatising the state-owned airline. In an interview, Minister of state for civil aviation Jayant Sinha tells Faizan Haidar that the government will soon announce a comprehensive package for the national carrier and a supportive policy for the entire aviation industry by working on the tax structure. Edited excerpts:
What, according to you, went wrong with the sale of Air India?
The transaction advisor has laid out a series of reasons which they believe led to not receiving any bids in the disinvestment process...The high debt burden that Air India was still carrying even in the disinvestment process, the 24% stake that the government had (decided to retain), the difficulties in putting together certain types of consortia, of course the lack of clarity on what would happen with respect to both formal as well as contract employees. And then of course industry conditions as well. So these were the kind of reasons...why the transaction did not go through.
But when you were planning the disinvestment, these things must have been discussed. Were these issues not considered at that time?
We provided, I think,a very balanced proposition for any bidder. I think it is really industry conditions which have turned quite adverse. As you know the airlines have done poorly in the last quarter and the quarter before that because of high interest rates, high oil prices, as well as the weakening rupee. So these industry conditions have also had an adverse impact. And obviously as I said, our goal in the disinvestment process was to provide a balanced offer for sale which is what we did.
So what next for Air India? Are you planning to start the process all over again?
Our goal right now is to position Air India as strongly as possible for the future. Of course, we remain committed to disinvestment, which even the Prime Minister has said, aviation minister has said. It depends on the industry conditions. So we will have to see how industry conditions develop before we take a decision on how to move forward on disinvestment. In the meanwhile, our goal is to strengthen Air India as much as possible, to provide the financial resources and liquidity that it needs to operate properly. And to become a great global airline, which is to have a global network, to ensure its employees get the best possible compensation packages, the best possible training so that we can provide the best possible services to passengers.
But for now, have you shelved the process ?
It depends on industry conditions; government is fully committed for disinvestment of Air India.
The Air India pilots association has been blaming the management for grounding aircraft and not having enough money to pay salaries. How are you planning to improve the situation?
As I said, the government is committed to ensuring that Air India receives all the necessary financial resources and has the liquidity to be able to operate as a really competitive global airline. We are working on a comprehensive package.
What all will be there in the package?
The comprehensive package will entail three important aspects — first will be the financial aspects in terms what we do on the balance sheet, second is organisational reforms and third will be what we do to further provide our employees a competitive set of terms and competitive package...We are working on it. We have had many rounds of discussions in the government on this.
The aviation industry overall seems to be in a crisis. Will government intervene if the situation goes out of control?
The airline industry is a cyclical industry and there are obviously periods when it does very well and then there are periods when it doesn’t do as well. Right now we are going through a difficult part of the cycle and our goal as a ministry is be able to provide a supportive policy environment for the entire industry so that players can flourish and provide the best possible services to passengers. There are many elements to a supportive policy, one of them of course is to bring ATF (aviation turbine fuel) into GST (goods and services tax), on which we have spent considerable time and effort working with the ministry of finance. Then there are a variety of other taxes that also we think should be optimised for the industry. After the implementation of GST, the overall tax burden for the industry has increased. And so we want to be able to bring it back to where it was. There is a variety of other things we are doing in terms of ease of doing business and enabling borrowing various types that we think will lead to a supportive policy environment.
Another concern is infrastructure at many metro airports. Government is also working on various expansion projects but do you
think that will be enough?
We have a very extensive programme underway to increase capacity everywhere, whether it is in terms of getting to an airport, terminal capacity, aerobridge capacity or runway capacity— every element of airport capacity we are looking at. We are also looking at building entirely new airports. Over all our effort is to increase capacity 4-5 times. We have taken a 15-20-year view.
One more item on the capacity expansion is Digiyatra, It will also significantly increase the capacity of airport because throughput is going to increase. That means more people will be able to move through the entire airport system. It is very close to implementation right now; what has taken time is to be able to work out a scheme which is acceptable to all the relevant stakeholders that includes the airport, the airlines, the security agencies as well as the unique identity authority because whatever we do has to be able to meet all of the privacy and public safety and the surveillance worry that people have brought up. So we have to design a system that is very, very future-proof in that regard and to do that has taken this time. We will create a biometric system and it will include very safe and secure biometric authentication process.
NEW DELHI:
The civil aviation ministry is also working on various projects such as regulation and use of drones and finalise passenger charter. What is the latest update on this?
The draft on drones got a large number of inputs. We have finished all consultations and will be announcing the drone policy very shortly. It will be an entire roadmap on how regulations will evolve in future. We have put that in place as well. It is very forward looking. The passenger charter is also largely complete and will be notified shortly.