Air India’s Disinvestment To Be Finalised by November 20

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Who owns the national carrier Air India being disinvested due to fragile finances and continued losses will be known on November 20, the date fixed by the government for intimation to the qualified interested bidders.

Disclosing this in a written reply to Congress member Anto Antony in the Lok Sabha on Thursday, Minister of state for Civil Aviation Hardeep Singh Puri said the disinvestment was decided since further financial support to revive the airline would not be the best use of scarce financial resources of the government, particularly in a competitive aviation market.

Asked by BJD member Bhartruhari Mahtab about the debts that Air India has piled up, he said its debts as on 31.03.2019 was to the tune of Rs 58,255.89 crore.

He said the last date for submission of the Expression of Interest (EOI) was extended to October 30 in view of the prevailing situation arising out of Covid-19. On offer is 100% equity share capital of Air India and Air India Express Limited and 50% shareholding of Air India SATS Airport Services Private Limited.

In reply to a specific question on payment of salaries to the staff during the lockdown period, the minister said all Air India staff has been paid salaries up to the month of August while the allowances of cabin crew and pilots have been paid up to June. He assured that the Air India employees will be absorbed by the new owner through a share purchase agreement to safeguard interests of the employees in accordance with the guidelines of Department of Investment and Public Asset Management of the Finance Ministry on strategic disinvestment of the central public sector enterprises.

In response to DMK’s Shanmuga Sundaram, Minister Puri said care has been taken to ensure that the substantial ownership and effective control of Air India shall continue to be vested in the Indian nationals as stipulated in the Aircraft Rules, 1937. Also, foreign investments, including those by the foreign airlines, shall not exceed 49% directly or indirectly except in case of the NRIs, who are the Indian nationals where the foreign investment is permitted up to 100% under automatic route.

Asked about the mode of hiring aircraft for rescue operations in case of emergency, the minister said the government can charter commercial services from Air India or its competitors.

In a written reply to another question by Congress member D K Suresh, the minister said several steps have been taken to develop the civil aviation infrastructure and these include promotion of private investment in existing and new airports through public-private-partnership (PPP) mode, route rationalisation in coordination with the Indian Air Force to select shorter routes to reduce consumption of aviation fuel and GST rate reduced to 5% for domestic maintenance, repair and overhaul.

On a question by Supriya Sule, Dr Subhash Bhamre, Dr Amol Kolhe and three others, the minister disclosed that the revenue of the Indian Airlines dropped from Rs 25,517 crore during April-June 2019 to Rs 3651 crore during April-June, 2020 as an impact of the Coronavirus. In case of Air India, the total revenue during the period was reduced from Rs 7066 crore to Rs 1531 crore. He said Covid-19 has also hit the financials of the Airports Authority of India (AAI) which may go into loss in 2020-21 and as such it has already taken Rs 1500 crore from the State Bank of India as the working capital facility.

In a written reply to TDP member Jayadev Galla, Minister Puri said about 60% of the air space in India is open for the commercial flights. The IAF is also vacating some air space for the commercial flights like the airspace 33,000 feet and above north of Pune local flying area (LFA) and airspace about 25,000 feet south of Pune LFA. When not used by IAF, the commercial flights are allowed to use this airspace.

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