The Civil Aviation Ministry is considering all options for debt-laden Air India including strategic investors who will ensure that the airline is kept running and there are no job losses, Finance Minister Arun Jaitley said.
“If there is a good management that comes forward, the government has a very good view on this. Out of the Rs 50,000 crore, about Rs 20,000-25,000 crore is the valuation of the aircraft, and for rest of the debt there are some assets of Air India. Therefore, the Civil Aviation Ministry is exploring all options,” he said.
Air India is the flag carrier airline of India. It is the fourth largest domestic airline in India in terms of passengers carried, after IndiGo, Jet Airways and SpiceJet.
It is owned by Air India Limited, a Government of India enterprise, and operates a fleet of Airbus and Boeing aircraft serving 90 domestic and international destinations. It is headquartered in New Delhi.
Air India has its main hub at Indira Gandhi International Airport, New Delhi and a secondary hub at Chhatrapati Shivaji International Airport, Mumbai. Air India became the 27th member of Star Alliance on 11 July 2014.
The airline was founded by J.R.D. Tata as Tata Airlines in 1932; Tata himself flew its first single-engine de Havilland Puss Moth, carrying air mail from Karachi to Bombay’s Juhu aerodrome and later continuing to Madras (currently Chennai). After World War II, it became a public limited company and was renamed as Air India.
On 21 February 1960, it took delivery of its first Boeing 707 –420 named Gauri Shankar and became the first Asian airline to induct a jet aircraft in its fleet. In 2000–01, attempts were made to privatise Air India and from 2006 onwards, it suffered losses after its merger with Indian Airlines.
The government is in favour of exiting Air India totally if a suitable investor is available, says finance and defence minister Arun Jaitley. “When 84 per cent of the aviation market can be run by private airlines there is no reason why it cannot go to 100 per cent”, the minister noted.
National passenger carrier Air India currently has a market share of 14 percent and a debt of Rs 50,000 crore. The private airlines enjoy 86 percent of the market share.
According to Directorate General of Civil Aviation, by December 2016, Air India’s domestic market share measured by the total number of passenger seats sold has dropped to 14.1 per cent, making it the third largest behind market leader Indigo at 39.8 and Jet Airways at 15.5 per cent.
Data released by the Directorate General of Civil Aviation shows that Air India has been steadily losing market share to private players like IndiGo, SpiceJet Ltd. and Jet Airways Ltd.
The government has no business to run an airline, according to the finance minister. “When I briefly worked as the minister for civil aviation in the Atal Bihari Vajpayee government, I had signed on Air India’s file asking for its total disinvestment”, Jaitley added.
Jaitley said, the civil aviation ministry headed by P Ashok Gajapathi Raju will, however, have the right to decide on the future course for Air India and they are considering all options.
The Ministry of Civil Aviation of Government of India is the nodal Ministry responsible for the formulation of national policies and programmes for development and regulation of Civil Aviation and for devising and implementing schemes for the orderly growth and expansion of civil air transport.
Its functions also extend to overseeing airport facilities, air traffic services and carriage of passengers and goods by air. The Ministry also administers implementation of the 1934 Aircraft Act and is administratively responsible for the Commission of Railways Safety.
The ministry is under the charge of Pusapati Ashok gajapati Raju, assisted by minister of state Jayant Sinha.
Minister of State for Civil Aviation Jayant Sinha had earlier said that Air India’s debt needs to be reduced and balance sheet restructured as part of its financial transformation.
“Air India’s balance sheet has to be restructured and debt reduced. The other issue is that corporate governance and professional management need to be put in place. Besides it has to be seen how best use can be made of the non-core assets of Air India,” Sinha had said.