Air India privatisation may have to wait as parliamentary panel bats for another chance for it

Throwing a spanner in the government’s plans to privatise Air India, parliamentary panel on transport, tourism and culture has recommended that the national carrier should be given at least five years to revive and write-off its debt. The Parliamentary Standing Committee on Transport, Tourism and Culture concluded that the government should review its decision to privatise or disinvest Air India and explore the possibility of “an alternative to disinvestment of our national carrier which is our national pride”, reported PTI. Strongly recommending that the airline’s debt “should be written off by the government”, the revised draft report said, “Air India should be given a chance for at least five years to revive themselves”. The tenure of five years indicates the end of the turnaround plan and FRP period in 2022. It said the airline’s debt was “due to policy directions of the ministry of civil aviation. Air India may be permitted to function as a government PSU with less government control”. The committee also expressed apprehension that Air India’s strategic disinvestment “would result in job loss of many people” and asked the government to “make an assessment” of the job loss before deciding on stake sale. “If the disinvestment of Air India and its subsidiaries is inevitable, the Committee emphatically recommends that the interests of employees should be protected,” the revised draft report said. It asked the ministries of finance and civil aviation to “develop a strategic package to protect the rights and interests of officers and staff of Air India and its subsidiaries in respect of their pension, gratuity and VRS and also the wages of contractual workers engaged by government from time to time in case the disinvestment of Air India is inevitable.”

While efforts have been made to revive the airline in the past, Air India has not reported a profit in at least a decade; in 2015-16 it posted an operating profit of Rs 105 crore and reduced its net loss to Rs 3,837 crore compared with Rs 5,859 crore in 2014-15. Retaining the airline in its fold is a much more expensive proposition for the government than transferring the ownership. The government would require to infuse amounts much higher than the Rs 50,000 crore proposed under a revival plan for AI, which entails it to continue as state-run entity. The Centre has already infused about Rs 30,000 crore in the airline over the past few years. AI has four subsidiaries — Air India Charters (which owns AIE), Airline Allied Services (which owns Alliance Air), Air India Air Transport and Air India Engineering Services — and various downstream arms and joint ventures.