Government will have to look at it one day because “it can’t give any more money to Air India in future”

Civil Aviation Minister Ajit Singh on Monday stuck to his stand that it was essential to privatise Air India and the government would have to clinch consensus some day. Talking to journalists at his residence here, Mr. Singh said the time was not ripe for privatisation because the government was left with just six months in office. “At present, there is no plan to privatise Air India… But I strongly believe that the government will have to look at privatisation one day. The government will have to seek political consensus as it can’t give any more money to Air India in future.”

Amused at the strong reaction his remarks on privatisation evoked, Mr. Singh said in an indirect reference to BJP leader Ravi Shankar Prasad: “I don’t make off-the-cuff remarks. I said all this after thorough consideration. I don’t believe the government should have [a] role in the services sector, be it running of airlines or hotel business. Future governments will have to study privatisation. But today, the time and the situation are not correct.”

On Sunday, Mr. Prasad said the issue was sensitive, which required a proper discussion before any decision was taken. “The Minister should not make off-the-cuff remarks on such important matters, especially when the time has come for the departure of this government,” he said.

In future, Air India would have to fend for itself and its employees and management would have to realise that aviation was a very competitive market, Mr. Singh said. “The margins are thin and it’s a capital intensive industry.” In the recent months, Air India had considerably improved its financial and operational position, including passenger load factor and on-time performance. “In the previous financial year, its earnings before interest, taxes, depreciation and amortisation (EBIDTA) was in losses to the tune of Rs. 2,300 crore. This year, it aims to earn a positive EBIDTA of Rs. 1,000 crore,” he said.

Mr. Singh also hinted that his Ministry would soon approach the Cabinet to relax the norms to allow Indian carriers to operate abroad. “I personally see no logic in such a rule [five years of domestic flying and a 20-aircraft fleet]. I feel there should not be any cap, but I have asked the Directorate-General of Civil Aviation to look into the issue. After collecting the views of the DGCA, we will move the Cabinet.”

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