Up to 20% sale in IA, A-I

New Delhi, Nov 18 | Updated: Nov 19 2005, 05:57am hrs
The government plans to disinvest up to 20% of its stake in state-owned Indian Airlines and Air-India by the first quarter of 2006. The public sector status of two carriers would, however, be maintained, said civil aviation minister Praful Patel on Friday.

Addressing the Economic Editors Conference, Mr Patel said, employees of the two state-owned airlines would be given stock options. The two airlines need more financial muscle and more equity. We cannot just do with the equity injected by the government if they have to face heightened competition, he said.

The minister also hinted at a possible merger between IA and A-I and said the two carriers required greater synergy in operations. Referring to the recent mergers in the global aviation industry, like KLM being taken over by Air France, Mr Patel said, Even in the domestic aviation scene, consolidation talks are on among some airlines.

Drawing the big picture, Mr Patel equated the sector with IT, telecom and BPO and said, In five years, the sector will require $30 million worth of investments and in 10 years, $50 billion. The Airports Authority of India (AAI) would raise about Rs 6,000 crore and undertake upgrade and modernisation of 35 non-metro airports across the country in one go.

Work on these airports would begin by 2006-07 and end by 2008-09, Mr Patel said, adding discussions were on with the Planning Commission about the ways in which resources could be mobilised for this purpose.

On the modernisation of the Delhi and Mumbai airports, Mr Patel said Australian consultant and global technical advisor Airplan, was likely to submit its report on the technical bids by the private bidders on Monday.

Following this, the report would be vetted by the civil aviation ministry and sent to the inter-ministerial group of secretaries and officials of concerned departments. The empowered group of ministers for the final evaluation by the first week of December.

We hope to award the contracts to the joint ventures by December end, the minister said. Referring to the Lefts concerns about privatisation of Delhi and Mumbai airports, which earn almost half the revenue of AAI per year, Mr Patel said the model for these two airports to be handed over to AAI-private consortia JVs was based on revenue-sharing.