Govt determined to privatise debt-laden Air India; aviation minister says will find 'best possible deal' for airline

The Narendra Modi government in its first term had also tried to exit from Air India but failed to get a buyer

FP Staff August 29, 2019 15:38:20 IST
Govt determined to privatise debt-laden Air India; aviation minister says will find 'best possible deal' for airline
  • The minister said the govt is fully determined to privatise Air India and is open to 100% foreign direct investment (FDI) in the aviation sector

  • The Narendra Modi government in its first term had also tried to exit from the airline business but failed to get a buyer

  • Over a dozen unions of Air India Monday came out strongly against the government's second bid to sell the financially-crippled national carrier

The government is determined to privatise debt-laden national carrier Air India.

Revealing this at a press conference, Hardeep Singh, Union Minister for Civil Aviation said the government should not be in the business of running an airline. The private sector should run airlines instead, he said.

The minister said the government is fully determined to privatise Air India and is open to 100 percent foreign direct investment (FDI) in the aviation sector. The government is determined to get Air India's privatisation process started and to get the best possibel deal ina time-bound manner, he said.

Puri said the first meeting of the alternative mechanism set up for Air India and headed by Home Minister Amit Shah will be held soon.

Subsequent to the first meeting, the minister said that the divestment process will pick up pace.

In July, Puri told the Rajya Sabha the Centre was committed toward privatising the national carrier. He mentioned then that Air India was incurring losses of Rs 15 crore a day, and, therefore, the government was attempting to make the carrier more “viable, revive it and then disinvest it", a report in Mint said.

Govt determined to privatise debtladen Air India aviation minister says will find best possible deal for airline

File image of Hardeep Singh Puri. News18

"Left to myself, I would be interested entirely in supporting the public sector. But, the question arises: Is the government equipped to run an entity, like Air India, where operational decisions on a day-to-day basis have to be taken on the spot?" Puri said in the Rajya Sabha.

The reconstituted GoM headed by Home Minister Amit Shah is expected to meet in the next few weeks to take decisions pertaining to Air India's privatisation, according to media reports.

In the wake of its proposed privatisation, the government has asked Air India to put a freeze on large-scale promotion and appointments.

A new flight has to be started only when it is extremely necessary and after due diligence from the commercial aspect.

"The direction came almost a week back. It says that due to impending privatization, no major initiatives have to be taken up. There will be a freeze on appointments and promotions," an official source told IANS.

The direction has come from the Department of Investment and Public Asset Management or DIPAM.

After failing to find a bidder in its previous term, the Modi 2.0 government is working on war-footing to sell Air India to a private player. It has already reconstituted the group of ministers (GoM) to decide the course of privatization.

Consulting firm EY is already working to finalize preliminary information memorandum (PIM) to invite expression of interest (EoI) from prospective bidders.

"This time, we have no doubt over disinvestment. The speed at which things are moving, the airline's ownership would be transferred to a private party," said a senior Air India executive.

Employees protest

Over a dozen unions of Air India Monday came out strongly against the government's second bid to sell the financially-crippled national carrier, union sources said after a meeting with the airline's management in July.

After the announcement, Air India chairman Ashwani Lohani had called a meeting of all the 13 unions of the airline to discuss the privatisation plan.

"The forum of 13 unions have decided to oppose the privatisation move," a union functionary told PTI over the phone from New Delhi after the meeting with the management.

During the meeting, which lasted for about two hours, union representatives told the management that they were ready to do anything to turn around the carrier but would not "accept" privatisation at any cost, the source said.

Another union functionary told PTI that the unions demanded a meeting with the Aviation Ministry as well as Finance Ministry over this issue.

"The unions have asked for the payment of all pending arrears first, before considering anything. Moreover, they have also asked for protection of all post-retirement benefits of employees," the functionary said.

During the meeting, Lohani told the unions that Air India's divestment is on the Centre's agenda and it would happen, the functionary added.

The Narendra Modi government in its first term had also tried to exit from the airline business but failed to get a buyer, forcing it to defer the plans.

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