Patel backs partial AI divestment

Praful Patel has signalled his willingness to champion partial divestment of government equity in Air India, even as his ministry pushes for a separate bailout package for the beleaguered national carrier.

Taking charge of the ministry of civil aviation as a minister of state (with independent charge) once again, Patel on Monday said that though AI will retain its PSU character, the airline could see some divestment of government equity “once the stock markets improve”.

Earlier, there was a proposal to divest up to 15% equity in AI, but the airline had sought almost Rs 4,000 crore from the government as equity and soft loan and the divestment was put on the back burner.

Now, even the bailout package in hanging fire with the government asking AI to draft a fresh proposal which would, in all likelihood, be for a much higher amount than the earlier figure.

Also, the merger of Air India and Indian Airlines is still unfinished and could cost the airline its place in Star Alliance unless at least the integration of IT systems is done fast.
On the issue of foreign airlines picking up stake in Indian carriers, Patel said that this matter involves many ministries. “You people know our ministry’s views... let us see what happens,” he said.

In December last year, the civil aviation ministry had forwarded its recommendation for allowing foreign carriers to own up to 25% equity in Indian airline companies for the latter to generate much-needed cash. But no decision was taken on the matter.

The minister also warned private airlines to desist from “reckless” expansion, asking them to show financial prudence.

Patel emphasised that safety, technology and regulatory issues will be given the highest priority during his second term in office, but declined to make any comments on Sunday’s near miss at Mumbai airport, where two aircraft came close to colliding.

He pointed out the need for enhancing aviation infrastructure but said he was “not very keen on privatisaton of brownfield airports or even using the Public Private Partnership model for older airports.”

Two of the country’s busiest airports — Mumbai and Delhi — have been privatised using the PPP model and both projects have faced flak on several occasions on the manner of privatisation, revenue models, etc.

Patel said that state-owned Airports Authority of India (AAI) has now got two other prime airports — Kolkata and Chennai — to manage, besides smaller airports across the country and it should now compete ably with private airport operators.