We are trying to revamp Air India through all measures: Mahesh Sharma

By: and |
Published: March 25, 2016 12:16:20 AM

The civil aviation policy is on the anvil as the government is in the final stages of ironing out the creases.

The civil aviation policy is on the anvil as the government is in the final stages of ironing out the creases. The controversial 5/20 rule, which has become a bone of contention between the incumbent and newer airlines, is set to be changed. In all probability, the five-year clause may go, but airlines may still need to have 20 aircraft if they want to fly overseas. Auctioning of bilaterals is another area which needs to be tackled. And the turnaround of Air India continues to be a priority area for the government. Minister of state (MoS) for civil aviation Mahesh Sharma, in an interview with Bilal Abdi and Sumit Jha, discusses all these issues. Excerpts:

The incumbent airlines are demanding removal of route dispersal guidelines if the 5/20 rule is removed to ensure a level playing field. What is your perspective on this?

Our stand is very clear — the route dispersal guidelines will stay. We may tweak the percentage to be deployed on tier III routes by reducing it from 50% to 35%. The final aviation policy will ensure that there is a level playing field on the whole 5/20 and route dispersal guideline issue. We have different options for tweaking the 5/20 rule, 20 aircraft can remain, but the requirement of five years may go. This is one of the proposals.

What is the rationale behind auctioning of unused bilaterals?

We have still not taken a decision on it. It will be premature to talk about it at this point of time. The group of ministers are at the final stages of clearing the policy, but many of the policy decisions are complex, so we are still ironing out some of the issues.

What is the status of Air India’s turnaround plan? When will the national carrier start showing operating profits?

Last financial year, we had losses of around Rs 2,600 crore and this year we have tried to cover almost Rs 2,500 crore of the losses. We may also have operating profits this year. For the whole carrier to have profit after tax is not possible at this stage as we have loan liabilities of around Rs 50,000 crore.

What is the plan to make the business of Air India profitable? When can we expect it to achieve profit after tax?

We are exploring different possibilities of revamping Air India’s structure, including monetisation of property, joint ventures and writing off of loan liabilities. We are also exploring the possibility of transferring some of AI’s shareholding rights to the banks which have financed it. We can give them some equity and maybe then either Air India continues or some other partner comes in, we are also open to that possibility. The Prime Minister has rightly said ‘the government has no business to do business’, but we should also keep in mind that Air India being a national carrier has some social obligations which it carries out in times of crisis; may it be Syria, Kashmir, Yemen and Nepal, in all such crisis situations, Air India has a played a vital role.

Can we safely say Air India is moving towards corporatisation?

Yes we can. These are all the options we have in front of us. We are trying to revamp it through all measures, including cost cutting. We saved around Rs 900 crore due to the falling crude prices. We decided to cut down the cost of operation by 10% and till now, we have been able to bring down the cost of operation by 5-6%. No fresh employments, contract employments etc, are the various measures we are taking to put back the national carrier on the right track.

One of the options you talked about was banks being given some shareholding rights. Is the government willing to get out of Air India?

The government may also keep some share, but for the value of the loan, suppose we give this equity to the banks, so now the stakeholder becomes banks, us and the third partner, AI, can also have a minority share. These are the options before us, but at present the decision of disinvesting Air India has not been taken. These are the options of revamping it. We are discussing all the options and when something concrete materialises, we will present it before the Cabinet.

With passenger growth increasing, many of the current airports will reach their optimum capacity in a few years. What steps does the civil aviation ministry has in mind to deal with the rapid growth in passenger as well as aircraft growth?

We plan to invest around Rs 6,200 crore in expansion and upgrade of the current airports. The Airports Authority of India (AAI) is a profitable entity. It will be able to invest the required amount for airport expansion projects. We plan to invest around Rs 880 crore for expanding the Lucknow airport and around Rs 850 crore for Tiruchirappalli airport, Rs 2,000 crore for the Chennai airport, around Rs 900 crore for the Guwahati airport and around Rs 300 crore for Leh, Srinagar and Dehradun airports. This investment will take place over a period of time.

Does the ministry have any payments pending from Kingfisher Airlines? What is the role of the civil aviation ministry in thiswhole case?

The ministry has no role as such, but (Vijay) Mallya has to pay a total amount of around Rs 272 crore to us, of which Rs100 crore was their security with us. The rest Rs 172 crore, with interest, comes to around Rs 200 crore. Two of their cheques of around Rs50 crore and Rs60 crore respectively, have bounced. We have filed two suits in the court for enforcing repayment of dues to AAI.

Why is the budgetary allocation to the civil aviation ministry declining?

The aviation industry is commercial in nature, why should it be supported by the government? Ideally, it should be self-earning and except for our national carrier, all our subsidiaries like the AAI and Pawan Hans, are profitable. Our aim is to make ourselves self-sufficient.

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