After botched stake sale, govt working on 4-pronged Air India revival plan

Debt-laden Air India has asked the government to provide for Rs 21.21 billion in additional equity to pay vendors

The government is in advanced stages of working out a four-pronged strategy to revive state-run Air India after the national carrier failed to attract investors for a sale.

The bailout package, according to Union Minister of State for Civil Aviation Jayant Sinha, involves a financial package, a series of reforms to make the airline a "professionally managed company", making it more competitive as compared to other private carriers and a series of measures to improve the workforce. 

However, when asked, he declined to give more details on the package.  

"Please wait for some more time. It is in its final stages and will be known soon. It's a complicated analysis," he said in Kolkata on the sidelines of the annual general meeting of the Calcutta Chamber of Commerce.

Debt-laden Air India has asked the government to provide for Rs 21.21 billion in additional equity to pay the vendors and a $120 million (Rs 8.40 billion) package for Air India is underway.  

Over airline ticket prices poised to soar in the upcoming festive season in the backdrop of the government imposing customs duty on aviation turbine fuel (ATF), Sinha said the government wouldn't intervene in setting a higher price or the entire pricing mechanism from the carriers. 

"There is no such proposal for capping on prices," he said.

Sinha said that there is a lack of captains to man the aircraft designed for the government's ambitious Regional Connectivity Scheme (popularly known as UDAN). The problem stems from the fact that most of the pilots have licenses to fly larger aircraft like the Airbus 320 and others while the license needed for smaller aircraft like ATRs still needs to be obtained. Flyers need to spend specific time-period on a particular aircraft variant to be eligible to command and fly it. 

"For certain types of aircraft we have shortages," Sinha said. 

However, he added that Rs 1 trillion of investment is in the pipeline for airports to improve air traffic management, capacity and improving the infrastructure, while under the Navnirman initiative, which is designed for a 15-20 year timeframe, aircraft operators are expected to complete a billion trips every year from the current level of 220 million trips a year. 

Asked about a second airport in Kolkata, Sinha said that air traffic to the city was poised to grow significantly in the coming days and the government "will have to add significant capacity". Either a second airport on the metropolis' fringes or enhancing the capacity in the NSCB Airport was being worked out.