Government rules out Air India divestment for now
NEW DELHI: The government on Wednesday ruled out disinvestment of Air India in the “immediate near future,” though it said it remains committed to completing the process.
Saying that the present environment is “not conducive” for it, minister of state for civil aviation Jayant Sinha told Rajya Sabha that the issue would be revisited once global economic indicators, including oil prices and forex conditions, stabilise.
The ministry would, in the meanwhile, focus on near and medium-term efforts to “capture operational efficiencies” to improve the performance of Air India, along with “monetising non-core land and building assets”, Sinha said.
The government had invited Expression of Interest (EOI) on March 28 this year for disinvestment of Air India including the national carrier’s share-holding interest in the Air India Express Ltd. and Air India SATS. But, it received no response till May 31, the closing day.
“The government remains committed to the disinvestment... The Air India Specific Alternative Mechanism (AISAM) has decided that in view of volatile crude prices and adverse fluctuations in exchange rates, the present environment is not conducive to stimulate interest among investors for strategic dis- investment of Air India in the immediate near future,” Sinha said. The government has also decided to separately deal with the mode of disposal of the subsidiaries such as Air India Engineering Services Limited (AIESL), Air India Air Transport Services Limited (AIATSL) and Airline Allied Services Limited (AASL).
He said the probable reasons for the lack of interest among bidders include the government’s 24 per cent stake and corresponding rights, a high amount of allocated debt, changes in macro environment, individuals not being allowed to bid, the profitability track record, and bidders not being able to form a consortium within the time-frame.
Sinha also said the ministry has started work on another version of regional air connectivity scheme for tourist destinations.
The existing scheme, known as Ude Desh ka Aam Nagrik (UDAN), seeks to connect unserved and under-served airports in different parts of the country. As many as 56 unserved and 17 under-served airports and 31 heliports would be connected under the scheme, Sinha said in a written reply to the Rajya Sabha.
In another written reply, he said the ministry has started work “on another version of the UDAN for connecting tourist destinations to other cities in India”. This followed a request from the tourism ministry, he added. Sinha said no airline has submitted a bid to operate UDAN flights connecting Bhagalpur airport in the first and second rounds of bidding.
(PTI contributed to this story.)