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Don't privatise Air India, give it 5 years to revive: Parliamentary panel

The parliamentary committee strongly feels that it will not be appropriate at this stage to disinvest the Air India

Press Trust of India  |  New Delhi 

Air India
Air India

This is not an appropriate time to divest government stake in Air India, which should be given at least five years to revive and its debt is 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 "piece meal basis", adversely affecting its financial and operational performance and "forcing" the airline to take loans "at a higher interest rate to meet the shortfall".

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

Observing that 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 solely from business point of view, as has been done by the NITI Aayog."

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

"At the end of TAP period, the government may evaluate the financial and performance status of and take a decision accordingly," the panel said.

The parliamentary committee, after hearing the views of all stakeholders, "strongly feels that it will not be appropriate at this stage to disinvest when has started earning profit from its operations."

It also said that as some of its subsidiaries Air Transport Services Limited (AIATSL), SATS Airport Services Private Limited (AISATS), Alliance Air and Express were making profits, these units should "not be disinvested."

Strongly recommending that the airline's debt "should be written off by the government", the revised draft report said, "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.

It said the airline's debt was "due to policy directions of the Ministry of Civil Aviation. may be permitted to function as a government PSU with less government control."

The Committee also expressed apprehension that Air India's strategic disinvestment "would result in job loss of many people" and asked the government to "make an assessment" of the job loss before deciding on stake sale.

"If the disinvestment of and its subsidiaries is inevitable, the Committee emphatically recommends that the interests of employees should be protected," the revised draft report said.

It asked the Ministries of Finance and Civil Aviation to "develop a strategic package to protect the rights and interests of officers and staff of and its subsidiaries in respect of their pension, gratuity and VRS and also the wages of contractual workers engaged by government from time to time in case the disinvestment of is inevitable."

The panel found merit in the views of some of its members that if is withdrawn from the aviation scene, "private airlines would indulge in gouging and that (will not be) in the interest of the consumers."

has a total debt of about Rs 488.77 billion at the end of March 2017, of which about Rs 173.6 billion were aircraft loans and Rs 315.17 billion were working capital loans.

The airline is expected to report a net loss of Rs 35.79 billion for 2017-18, as per budget estimates projected for 2017 -18 from a provisional net loss of Rs 36.43 billion for 2016-17.

The airline is projected to increase its operating profit to Rs 5.31 billion (BE projected) for 2017-18 from a provisional operating profit of Rs 2.15 billion for 2016-17, as per latest figures tabled in Parliament.

First Published: Mon, January 08 2018. 02:06 IST