Debt laden Air India up for sale? CEA Arvind Subramanian wonders whether it should ‘exist at all’

By: |
New Delhi | March 02, 2017 4:59 PM

Air India's performance has improved with competition posed by private players, Chief Economic Advisor said today, but wondered whether the state-owned airline should "exist at all".

Arvind Subramanian, Air India, IndiGo, Union Budget, The Economic Survey, CEA“Air India with IndiGo and Jet Airways is very different from Air India without… Whether Air India should exist at all even with Jet Airways and IndiGo is another question which we don’t want to go into now,” Subramanian said.(Reuters)

Air India’s performance has improved with competition posed by private players, Chief Economic Advisor said today, but wondered whether the state-owned airline should “exist at all”. The national carrier, staying afloat on a Rs 30,000-crore bailout package from the central government, is working on ways to improve its financial position. In the last fiscal ended March 2016, the airline had posted an operational profit of Rs 105 crore.

“Air India with IndiGo and Jet Airways is very different from Air India without… Whether Air India should exist at all even with Jet Airways and IndiGo is another question which we don’t want to go into now,” Subramanian said.

The point is competition has actually improved Air India’s performance, he added.

You may also like to watch:

Subramanian was delivering the keynote address at the national conference on economics of competition law here.

Despite a debt of Rs 46,570 crore, including Rs 15,900 crore on account of aircraft acquisition, Air India managed to report an operating profit in 2015-16.

In the Union Budget 2017-18, the airline has been allocated Rs 1,800 crore as part of the Rs 30,231 crore financial bailout package.

Last month, the government informed Parliament that Air India is expected to post an improved operating profit margin this year even as liquidity constraints continue to impact the carrier’s smooth performance.

While there have been clamours to privatise the airline, the government has so far desisted from taking a view on this.

The Economic Survey 2016-17, which was prepared by a team led by Subramanian, had also made an indirect reference to Air India.

Th ambivalence towards the private sector is manifest in multiple ways and the most well-known example is the difficulty of privatising public enterprises even for firms where economists have made strong arguments that they belong to the private sector, the Survey had said.

“Consider the civil aviation sector. Defying history, there is still the commitment to make the perennially unprofitable public sector airline ‘world class’,” it had said.

Get live Stock Prices from BSE, NSE, US Market and latest NAV, portfolio of Mutual Funds, Check out latest IPO News, Best Performing IPOs, calculate your tax by Income Tax Calculator, know market’s Top Gainers, Top Losers & Best Equity Funds. Like us on Facebook and follow us on Twitter.

Financial Express is now on Telegram. Click here to join our channel and stay updated with the latest Biz news and updates.

Next Stories
1India loses Farzad-B gas field in Iran
2Credit Suisse gives $1 million in COVID medical aid
3Housing sales up 21%, new supply down 40% in Jan-Mar; demand to be muted in Apr-Jun