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'Air India may start making net profits from 2019'

Press Trust of India  |  Hyderabad 

Air India is expected to start making net profits from 2019 and operational profits from the current fiscal on the back of better passenger yield and load factor, a top Civil Aviation ministry official said today.

"From December onwards, for the first time in about ten years, Air India has been consistently making operational profits. It is still making net loss, primarily because of the interest burden. But operationally, it is EBITDA positive," Rajiv Nayan Choubey, Secretary, Ministry of Civil Aviation, told reporters on the sidelines of India Aviation-2016 event.

He also said the recovery of the beleaguered airlines would be faster if oil prices continue to be low.

"The turnaround plan of Air India envisaged that it will turnaround by 2020. Now, it is likely to turnaround one-and-half years before 2020, which means it will make net profits by 2019 instead of 2020.

"If only the oil prices continue to rule soft, then of course we would be very happy...Air India's recovery would be much faster," Choubey said.

Replying to a query, he said the government has been pumping in about Rs 2,500 crore every year into the national carrier.

Civil Aviation Minister Ashok Gajapathi Raju said the new Civil Aviation Policy is at an advanced stage. The policy has been put up on the website and suggestions are called for.

"We are seeking guidance from some of the senior ministers also. There will be implications. We are hopeful that by April of next accounting year, the policy will be out," the minister said.

Choubey said the government has received many

recommendations on the '5/20' rule, under which airlines in India are permitted to fly abroad only if they have five years of domestic flying experience and at least 20 aircraft in their fleet.

The minister hinted that the government is not in favour of the rule.

"What is scientific about 5/20? 5/20 is peculiar thing for India. Cabinet will take decision on that issue," Raju said when asked if the government will scrap the rule.

On the MRO (maintenance, repair and overhaul) industry, the minister said the government is working to solve certain problems pertaining to the sector and hoped that the USD 700 million industry "that is going out currently" will come back to India.

Choubey said the number of middle-class people in the country is 350 million while the domestic ticketing sales are only 70 million and on an average, a middle-class Indian travels by air once in five years.

He said one of the reasons for the low penetration of air travel is lack of operational regional airports.

"The first reason is the lack of regional airports. One has to travel 4-5 hrs to reach main airport. Another reason is non-affordable fare. In the draft policy, we are talking about both the problems," he said.

According to the official, around 350 air strips are lying unused across the country which were built during World War-II.

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First Published: Wed, March 16 2016. 20:13 IST