Air India revival plan: The Narendra Modi government is considering all options to revive the beleaguered Air India. It is indeed a monumental task to turnaround the state-run carrier which has been facing a huge debt problem, according to Indian Express report. It has been learned that Air India’s consolidated debt has risen to a whopping Rs 50,000 crore. In a more trouble for the airline, CBI is probing the merger between the Air India and Indian in 2007. The decision, which has not led to the desired benefits, was taken during UPA tenure. Now the central government is working on suggestions given by Niti Aayog, the IE report says.
Here key options that the central government is looking into
The central government is expected to take decision within three months, says IE report.
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The aviation ministry is considering disinvestment and privatisation of Air India.
Niti Aayog has suggested a number of steps to nake Air India viable airline. Sale of stake to a strategic investor is one of them, the report says.
Finance Minister Arun Jaitley had pitched for Air India’s disinvestment. Civil Aviation Minister Ashok Gajapathi Raju has said no option has been closed for the airline. “NITI Aayog has made recommendations for making Air India strong and viable. All courses of action are being examined. We have not closed any option,” Raju was quoted as saying by PTI.
Arun Jaitley had said the private sector was capable of handling 100 per cent traffic in the aviation sector, indicating the need to disinvest the government’s stake in Air India. Even the Economic Survey 2017 had also suggested that government should privatise Air India, according to IE report.
The airline saw an operating profit of Rs 105 crore in 2015-16. It is expected to post similar level of operating profit in 2016-17. But its net loss narrowed to Rs 3,836 crore in 2015-16 as compared to Rs 5,859 crore in 2014-15.
In its audit report on turnaround plan and financial restructuring plan (TAP/FRP) of Air India released in March, the Comptroller and Auditor General of India (CAG) said Air India earned surplus over variable cost during 2012-13 and 2014-15, but it failed to generate enough surplus to meet the total cost, the deficit over total cost being Rs 5,514 crore in 2015-16. The CAG report also noted that the benefits for Air India from the FRP have been largely eroded by high volume of short-term loans, the report says.