This means a partial reversal of PPP-style modernisation of airports that Patel championed in his previous term as aviation minister, when he went aggressively to rope in private players in airport development as well as in airlines.
This is being seen as a move to add muscle to the state-owned Airports Authority of India (AAI), though it will deprive the private sector from participating in modernisation and development of non-metro airports. AAI is currently developing two major airports of Kolkata and Chennai and 35 non-metro airports.
The previous government wanted to privatise the Kolkata and Chennai airports, along with the Delhi and Mumbai airports, but backed off on strong opposition from its Left allies. The countrys passenger traffic is projected to touch 54.78 million this year and go up to 85.30 million by 2016-17, requiring massive investments in airport development.
Patel also said the government would consider an initial public offer (IPO) for the state-owned carrier Air India in the near future, while he cautioned private airlines against reckless expansion and financial misadventure. The share sale would bring in much-needed equity to the loss-making company and make it more accountable, Patel said.
About the IPO plans of the National Aviation Company of India Ltd (Nacil), which owns the Air India brand and is supposed to have suffered losses of Rs 4,000 crore in 2008-09, Patel said much will depend upon the state of equity markets. Even though Nacil has suffered record losses for the past three years, merchant bankers said the pubic issue can still succeed.
The Sebi rules mandate that a company going for an IPO should have a track record of distributable profits for three out of preceding five years, besides four other key conditions. However, an exception is allowed to a company not satisfying any or all of the five conditions. Such a company would have to go through a mandatory book building issue, wherein qualified institutional investors (QIPs) need to subscribe a minimum of 50% stake being offered for sale, said SMC Capitals equities head Jagannadham Thunuguntla.
Nacil, which was carved out after merging Air India and Indian Airlines more than two years ago, is in desperate need of funds. It is also struggling to integrate the two companies that have employee strength of nearly 33,000. The aviation ministry has asked the government for an equity infusion of Rs 1,231 crore and a soft loan worth Rs 2,750 crore for the troubled carrier. Sources said the finance ministry is apprehensive of granting a soft loan to NACIL, which at present has a paid-up capital of Rs 1,450 crore and an authorised capital of Rs 1,500 crore.
We will try to get AI the money from the government that has been promised, but I cant speak on behalf of the finance ministry and neither can I comment on the (impending) Budget, Patel said.
While advising the private airlines to hunker down, the minister said Air India will carry out its largest fleet acquisition plan. Air India has placed orders for 111 new planes worth over Rs 45,000 crore.
Patel said he would be happy to associate with the national carrier for another five years, adding that time and history would tell whether the merger of Air India and Indian Airliens was a right decision. These are testing times and everybody will have to rise to the occasion, he said.