Fund infusion in AI necessary to keep airfares in check: FM

"As far as AI is concerned there is a turnaround plan. I am not happy with the way the plan has been implemented in the past. There has been several setbacks. But what do we do with AI? If I do not provide this Rs 2,000 crore there will be greater difficulty," he said winding up a discussion on the supplementary demands for grants.

Of the additional expenditure Rs 32,120 crore under the first batch of supplementary, Rs 2,000 crore has been earmarked for equity infusion in Air India as part of the turnaround plan and restructuring package.

"If AI is not kept afloat, what will happen is airfares will go up, other airline companies will simply push up their air fares because so many seats will not be available. Which is why we are providing Rs 2,000 crore to AI," Chidambaram said.

The Minister said there were some indications of an uptick in Air India in the last quarter and hoped that AI employees and management will also assist in turning it around.

The national carrier's losses have been mounting from Rs 5,548.26 crore in 2008-09, Rs 5,552.44 crore in 2009-10, Rs 6,865.17 crore in 2010-11 to Rs 7,853 crore in 2011-12.

"There are airlines in the country and around the world running in profit and there is no reason why AI should not be turned around," Chidambaram said.

His response came after members from parties like BJD, Trinamool Congress questioned the government's move to infuse more funds when there was no proper plan for the turnaround of the national carrier. (MORE)