Government think tank, Niti Aayog has recommended strategic disinvestment of loss-making Air India to make sure the Centre does not have to sink in more money into the airline and can allocate more funds for health and education. Niti Aayog's fourth report, submitted recently, has detailed a possible roadmap for Air India disinvestment, including writing off loans to the tune of £3 billion.
It proposes to transfer the aircraft-related loans and the working capital to the new owner, while taking care of half the liability. It suggested that real estate assets, which include prime locations in many cities, can be hived off into a separate company before offering up to 100 per cent equity to a strategic partner. The buyer will also get separate other rights currently enjoyed by the state-run airline. Officials even suggested that there is no need to have a designated national carrier. Air India has accumulated losses of about £4 billion and projected a cash deficit of £300 million for the current financial year with a gap narrowing to around £170 million annually in the coming years.
A source said, “The Aayog's recommendation is very clear: find a strategic investor for AI. Now that is a call for the owner to take. Some initial clarity on the future course may come in the next 15 days or so.” Aviation Minister A Gajapathi Raju and his deputy Jayant Sinha confirmed that Niti Aayog had submitted its report, but refrained from disclosing details. “We are very proud of AI and will consider all possible alternatives for it. All options are open. Niti Aayog has suggested steps for a strong and viable airline,” Raju said at a press conference.
AI needs to get £2.5 billion more from the government over the next 15 years. “It is not correct to see us as a domestic airline alone with 14 per cent market share. We are essentially an international airlines with a very robust foreign network. Our share of international travel to and from India last year was close to 17 per cent. AI has a critical network and it should not be seen as a burden. We are a victim of wrong decisions by previous governments. Luckily, there is a clear administration determining our future now,” an insider said.
A ministry official said Niti Aayog's recommendations are not binding on it and it will choose the path that is most suited for having a strong AI in future. “We hugely respect Finance Minister Jaitley's views. What we can assure everyone is that there will be visible action in AI very soon as Niti Aayog's recommendations and the FM's statement have been made in all seriousness that will lead to the future path for the airline being laid out in three months,” the official said.
