Ia Awaits Govt Decision On Kelkar Committee Report

Indian Airlines is awaiting a government decision on the Kelkar committee report. The fleet expansion and replacement plans of the airline hinges solely on the acceptance of the recommendations of the report.

The moment the Kelkar committee report and recommendations are cleared (by the Union government), Indian Airlines' fleet expansion will be in place, according to sources here.

The Kelkar committee has suggested that Rs 500 crore be pumped into Indian Airlines immediately.

It has also suggested expansion of the airline's low equity base by induction of Rs 125 crore into its capital base as part of the financial strategy for the state-owned domestic air carrier.

 

The government has already set up a sub-committee under the Planning Commission to explore the means of implementing the report to bring about a turnaround for Indian Airlines.

The committee headed by the principal adviser for transport in the planning Commission has been given time upto the middle of next month to finalise an action plan.

Civil aviation minister C M Ibrahim has already indicated that the government will respond positively to the recommendations of the Kelkar report.

Besides recommending a rationalisation of routes and network, fleet enhancement and organisational recast, the committee wants the government to meet the additional financial burden of the airline in shouldering the liabilities of Vayudoot.

In the first stage, the committee has urged that the Centre inject Rs 150 crore as interest free subordinated debt (in 1996-97) to be repaid by the Indian Airlines by the turn of the century.

The committee has also suggested a contribution of Rs 200 crore as compensation for grounding Airbus A320s in 1990.

The Kelkar committee has made it clear that Indian Airlines is likely to become a non-entity within 2005 with a market share of only 11 per cent if fresh capital was not infused initially by the government and later through disinvestment.

Without finances, airline officials say it would be next to impossible to expand the Indian Airlines fleet and replace ageing aircraft to survive in the competitive domestic market which was likely to see new entrants.