Aviation min reluctant to take outside help in Nacil revival

Although it incurs huge financial losses every year, the civil aviation ministry is reluctant to let other agencies run diagnostic checks on the ailing National Aviation Company of India (Nacil), which runs Air India (AI) and offer a revival plan.

A suo motu move of the Board for Reconstruction of Public Sector Enterprises (BRPSE) has met with resistance from the ministry, which has offered no help so far to allow BRPSE to investigate conditions in the state-run AI.

BRPSE Chairman Nitish Sengupta had written a letter to Union Civil Aviation Minister Praful Patel, asking the ministry to “help” BRPSE study Nacil and come out with a revival plan. “More than six months have passed but we still waiting for a reply from the ministry,” Sengupta told Business Standard.

BRPSE has even approached the highest possible government quarters, but not received any encouragement so far.

“We have the suo motu power to study an ailing PSU. But it is impossible to review the situation if the parent ministry doesn’t cooperate. For every details and papers, we depend on the nodal ministry. Without the help of the ministry and its officials, we can do nothing,” Sengupta said.

In 2009-10, Nacil posted a loss of Rs 5,400 crore. Around 80 per cent of these losses were due to interest payment, depreciation and lease rentals. In 2008-09, it suffered a loss of Rs 5,548 crore, and a Rs 2,226.16-crore loss in 2007-08.

The airline’s total expenses on lease rentals during 2007-08 were Rs 717.2 crore, Rs 811 crore for 2008-09 and Rs 759.25 crore in the financial year 2009-10 (up to February 2010).

Civil Aviation Minister Praful Patel had recently said in Parliament that “the trend of losses is likely to continue for few more years.”

While Nacil’s aircraft acquisition programme received flak from the Parliamentary Standing Committee on Transport, Tourism and Culture, headed by CPI(M) leader Sitaram Yechury, another Parliamentary panel — Committee on Public Undertakings — had recommended a de-merger of AI and Indian Airlines (IA).

According to the Yechury-led panel, the two companies were united in “irrational and misplaced” policy decisions of the government.

The panel also recommended a probe into the Rs 45,000-crore fleet acquisition plan of AI during the lean phase of the civil aviation industry.

The merger of AI and IA was done in March 2007. The ministry claimed such a move was necessary for economies of scale and increased leverage.

The Committee on Public Undertakings recommended that Nacil (IA) and Nacil (AI) should each be headed by a managing director, who should report to the chairman. The report said Nacil was fast slipping into an “abyss” and there was “something radically wrong either with the projections of the benefits or the merger or with the implementation of the merger”.

The committee had also asked for a “thorough probe” to fix responsibility of officials or agencies involved in the merger.