Govt likely to allow AAI to raise Rs 5,000 cr

The Government is likely to allow state-owned Airports Authority of India to raise Rs 5,000 crore through infrastructure bonds to enable it to finance its ongoing programme to modernise and expand a large number of airports across the country.     

"They are free to raise resources whichever way they want to. Airports are a vital infrastructure. (The) Government will definitely consider the proposal," Civil Aviation Minister Praful Patel told PTI here, confirming that the AAI was considering raising Rs 5,000 crore through this measure.     

Air India would also get equity infusion from the government and "we will also try to get some soft loan" for the national carrier, he said, adding that it would eventually go for an IPO depending on the market situation, said Patel, who made a record of sorts by taking over charge of the Ministry for the second consecutive five-year term     

Patel also made it clear that Air India would not be privatised and any equity dilution would not affect its public sector status.     

On airports, official sources had earlier said the AAI's proposal to raise Rs 5,000 crore through infrastructure bonds was being scrutinised by the Finance Ministry. The nature of the bonds, their tenure and other issues would be finalised after the necessary approval, they had said earlier.

Lauding the airports body, which has been granted 'Mini Ratna' status for doing a "commendable job" in developing airports in areas where there was no connectivity, Patel said the private sector would have a major role to play in airport development through the greenfield route.     

"We will continue to encourage private participation in infrastructure creation in this area to build world-class airports," he said.     

To questions on Air India's integration process, he said National Aviation Company of India Ltd (NACIL) would "soon invite bids" to integrate the IT networks of the two erstwhile carriers Air India and Indian Airlines.     

"We have taken serious note (of the delay in this process). The issue has to be resolved at the earliest," he said.     

He said NACIL, which runs Air India, would "invite fresh bids and insist on a timely completion of the process," Patel said.     

The integration of the IT network as well as that of their codes of AI (for the erstwhile Air India) and IC (the erstwhile Indian Airlines) is a major requirement for the airline to enter the Star Alliance.     

Asked whether he would carry out "second generation reforms" in the aviation sector in his second term, Patel said that the government intended to "take things forward" in the aviation sector.

"First, we want to stabilise the sector in the next six months. That is why we are trying to tell the airlines to be cautious about their growth plans, specially because of the developments in the past one-and-a-half years — fuel price hike, economic slowdown and the 26/11 Mumbai terror attacks".    

 "But one thing that has come out from all this is that budget carriers or the low-fare carriers have been certainly lesser hit than the full-service airlines. So we have a lesson in this, that India is price sensitive. Therefore, the future is certainly more in the low-fare sector," the Minister said.     

Asked if further reform measures were likely to be carried out during his fresh term, he said once stability returned to the sector over the next six months, "certainly there will be no looking back after that. We will have to go in for reforms.    

"The challenge is that we have already reformed so much... that aviation has virtually become a deregulated sector. There is open or liberalised sky policy both in the domestic and international sector," he said.    

 To further questions, Patel said "except for FDI and some regulations here and there, the bulk of it (reforms) have already been achieved in the last five years."

Maintaining that the government could "not write cheques for airlines", he said it would certainly consider rationalisation of taxes and take up with state governments the issue of lowering their sales tax rates on aviation turbine fuel. "We want to tell the airlines to be little cautious in their growth plans and stabilise operations."     

To questions on consolidation in the industry during the past two years, the minister said the government "does not get into that. Consolidation is determined by the market forces. The sector is deregulated and there is a free market economy. We don't get into the business of regulation beyond a certain point." The past few years have seen Jet Airways and Kingfisher Airlines merging with or acquiring Air Sahara and Air Deccan respectively.     

Asked about the newly-set up Airports Economic Regulatory Authority, he said the existing spirit behind the body was to regulate economic matters relating to airports.     

Praful, however, did not rule out expanding its ambit in the future to include passenger amenity-related issues "but not in terms of airfares as this is a deregulated sector".