House panel asks govt for details on Air India disinvestment

Air India, which has a debt burden of more than Rs 52,000 cr, is staying afloat on taxpayers' money

A parliamentary panel has sought details from the government on giving in-principal approval to its divest stake in Air India even as modalities are being worked out for the proposed divestment to revive the debt-laden national carrier.

Officials from the ministries of finance and civil aviation as well as from Air India are expected to provide views this week to the Parliamentary Standing Committee on Transport, Tourism and Culture.

On June 28, the Cabinet Committee on Economic Affairs gave in-principle approval for considering strategic disinvestment of Air India and five of its subsidiaries.

The committee will hear the views of the Ministry of Civil Aviation, Department of Investment and Public Asset Management (Ministry of Finance) and Air India on the disinvestment of the airline on July 12, according to the panel’s schedule.

Sources had earlier said that the committee had discussed the government’s decision at its meeting held on July 5 and later decided to seek details on the same.

The 31-member panel is headed by Trinamool Congress member Mukul Roy and has 21 members of Parliament from the Lok Sabha. The members include those from the Congress, Bharatiya Janata Party, Biju Janata Dal, Samajwadi Party Communist Party of India (Marxist) and Telugu Desam Party.

A group of ministers, headed by Finance Minister Arun Jaitley, would be looking into various aspects related to Air India. It would look into the treatment of unsustainable debts of the national carrier, hiving off certain assets to a shell company and de-merger and strategic disinvestment of three profit-making subsidiaries, among others.

Air India, which has a debt burden of more than Rs 52,000 crore, is staying afloat on taxpayers’ money. The previous UPA government had extended bailout package worth little over Rs 30,000 crore to the national carrier for a 10-year period starting from 2012. 

The national carrier’s main grouping — the Air Corporations Employees’ Union (ACEU) — is opposed to the disinvestment. The ACEU represents Air India’s non-technical staff and has nearly 8,000 of the airline’s total 21,137 employees as members.

On July 12, the panel is also expected to “consider and adopt the draft reports on the Merchant Shipping Bill, 2016 and the Major Port Authorities Bill, 2016”.

Airline subsidiaries

The government is considering selling state-owned Air India in parts to make it attractive to potential buyers, as it reviews options to divest the loss-making flagship carrier, several government officials familiar with the situation said. Following are six AI businesses which could also figure in the sell-off process  

Loss-making

• Hotel Corporation of India: Owns two 5-star Centaur hotels in Delhi and Srinagar 

• Alliance Air: Operates flights to 37 destinations in India 

• Air India Engineering Services - runs aircraft maintenance facilities at six airports for Air India and private airline companies 

Profitable

• Air India SATS: A JV providing ground and cargo handling services. Estimated value $185 mn 

• Air India Express: A low-cost carrier. Estimated value around $1.16 bn. Also, includes Air India Charters, a charter business