Union Civil Aviation Minister Ajit Singh on Wednesday ruled out a “bailout” for struggling private airlines and asked Air India to pull up its socks and become competitive as the Government could not continue to pour money to keep it afloat.
Talking to journalists here, Mr. Singh said Air India had to become competitive and take up challenges. “Government is in no position to bailout any private airlines. Air India is a public sector unit, so government has an obligation. But Air India will have to become competitive and restructure their costs as the government cannot keep on pouring money,” he remarked after laying the foundation stone for a new ATC tower at the Indira Gandhi International Airport here.
Mr. Singh has indicated that there was some kind of small “roadblock” in Air India's restructuring plan by SBI Caps, raised by the banks. This would be resolved jointly by Civil Aviation Secretary and Finance Secretary, he said.
The Civil Aviation Minister said a Group of Ministers (GoM) will soon meet to decide on allowing foreign airlines pick up stakes in the Indian carriers. “Finally, the Cabinet will take a call. The Committee of Secretaries (CoS) has already recommended raising the FDI limits in the aviation sector,” he said.
The Ministers comments come close on heels of reports that government was exploring options to allow foreign airlines pick up equity in Indian carriers. Asked about demands by private airlines for a bailout package, he said they will have to come up with a viable business plan. “If the banks are satisfied with their plans and think they can recover their money then they will lend money. The banks would have to go by the RBI norms,” he added.
On reports of safety being compromised by airlines due to their poor financial conditions, the Aviation Minister said there are problems as the industry has grown very fast in past few years. “There is shortage of trained pilots, of stewardess. There are financial implications. But as far as question of jeopardising the safety of passengers is concerned, there is no such fear. There is no compromise, DGCA will not compromise and the Ministry will not compromise,” he said.
