PlanCom deputy chief bats for Air India privatisation

Montek says national carrier is a good case for privatisation as nowhere in the developed world countries run their flag carriers anymore

Civil Aviation minister Ajit Singh is not alone in his support for privatisation of Air India (AI). Montek Singh Ahluwalia, deputy chairman of the Planning Commission will back any such move.

“AI is a good case for privatisation, as nowhere in the developed world do you have countries running their flag carriers any more,” he told Business Standard.

Economically too, the government carrier makes a full case for privatisation, as it has been running into losses for long and its real assets are only its routes, he said.

Ahluwalia’s comments assume significance because of a debate on the issue due to AI’s mounting losses.

Recently, the aviation minister talked of AI privatisation, but withdrew his statement following opposition from some quarters. With half a year left for United Progressive Alliance-II to complete its term, Singh had said the time was not right for the government to consider the move. “There is no plan (for privatising AI) and the issue is not under active consideration at all,” he said.

Singh, however, maintained it was his personal belief that, in the future, “the government of the day will have to look at privatisation and build a political consensus on the issue before taking a position. I never said I am going to do it”.

Maintaining that the government would not give any more funds to the airline after the equity infusion of Rs 30,000 crore till 2021, Singh said, “I am firmly of the view that government should not be in the service sector, like hotels.”

The airline has about Rs 45,000 crore debt. This comprises debt for aircraft buying, loans from banks and others. However, it undertook a series of cost cutting measures and an aggressive marketing strategy after registering huge losses for years. This resulted generating a cash surplus of Rs 460 crore in the April-June quarter.

A feeble attempt was made to privatise Air India in 2000-01. Hindujas and Tata-Singapore Airlines were interested in the stake. While the former showed interest in both the carriers, the latter was interested in Air India. Both the national airlines were later merged.