“Forward ever, backward never: onwards with Breaking Through”

Govt open to strategic disinvestment in Air India: FM

NEW DELHI: Finance minister Arun Jaitley has said that the government is open to the idea of inducting a strategic partner in Air India and the civil aviation ministry was exploring all possible options for the ailing state-run airline.

This is the first clear comment from the government about the future of Air India.

"Today they have a market share of 14% and a debt of Rs 50,000 crore. Your money does not go into private sector airlines such as Indigo, Spicejet, Go Air, Jet Airways then why should you put Rs 50,000 crore in running Air India? Government money means your money. This money can be used for education," Jaitley said during a panel discussion on Doordarshan News.

When asked about the government's strategy to deal Air India, the finance minister said that if a good management comes forward, government will consider disinvestment. Jaitley explained that of Rs 50,000 crore debt, nearly Rs 25,000 crore is the value of aircraft. The airline also has some other assets. The civil aviation ministry is exploring all options. "If 86% of the flying can be handled by the private sector they can handle 100% also," Jaitley said.

On May 17, TOI had reported that the government has the government has tasked NITI Aayog to devise a road map for the beleaguered state run carrier, which may include recommendation for a strategic sale.

The FM also said that strategic sales in state run firms will gather pace in the next two years. "Let there be no misunderstanding that we are going slow on disinvestments. Leaving some sectors where the presence of the government is necessary, the role of the private sector in other sectors is very large," Jaitley said. The Modi government had promised to push ahead with strategic disinvestment, which involves ceding management control, when it swept to power in May 2014 but the process has made limited progress.
The Vajpayee government had made efforts to sell a stake in Air India and the then disinvestment minister Arun Shourie had promised to push ahead with a strategic sale even if one bidder was in the fray. But the plans fell through and Air India continued as a state-run entity.

Estimates suggested that the airline has liabilities of over Rs 52,000 crore, with the interest burden alone estimated at Rs 4,000 crore a year. While Rs 25,000 crore has been pumped in over the last five years, a similar amount has been committed till 2032.

A large part of the blame is on the way the national carrier was operated during 2005-07 when an aircraft acquisition plan of Rs 50,000 crore. The airline's turnover was around Rs 15,000 crore. That put Air India under a severe debt burden.

On political opposition to closing down Janpath hotel, Jaitley said: "Running hotels is not the business of the government. In Connaught place there is a hotel on 4 to 5 acres of land and even 10% of the rooms are not occupied. Tt is rented out to only government offices. Are we running hotels in this manner? It's a farce," he said.