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State’s flight of fancy with Air India Express

M.P. Praveen
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Kerala yet to set the ball rolling forclaiming a stake in Air India Express

The applause died long back but the State government has not yet made good its promise to stake claim over the budget carrier Air India Express (AIE).

Almost two months ago, Chief Minister Oommen Chandy won over an audience of largely Middle-East-based Non Resident Keralites at the Pravasi Bharatiya Divas with a statement of intent. It now seems Mr. Chandy’s plan B — a stake in AIE — was an escape route hatched to wriggle out of a tight spot when Plan A — Kerala’s proposed Air Kerala — nosedived after Centre played by the book and refused to relax norms.

Union Minister of State for Civil Aviation K.C. Venugopal was noncommittal when asked about the probability of conceding a claim of stake by the State government. He said he viewed the State government’s interest in AIE “positively” while underlining the fact that AIE remained a fully owned subsidiary of Air India, the national carrier.

“The possibility of such a proposal could be explored. But it’s extremely premature at this stage to say anything about it, as discussions have to be held at the very highest level,” he told The Hindu .

An aviation official, who has been in the industry for over a decade, pointed out that AIE remains a fully owned subsidiary of Air India, which is a centrally owned public sector unit. “There is no precedent of giving State governments shares in a Central PSU. Hence, approval to the State’s proposal will have to be debated at the Union Cabinet level. But accepting it will literally open a Pandora’s Box, as every other State may come up with similar claims,” he said.

High Court lawyer P. Gopinath Menon said if AIE remains a separate entity despite being a fully owned subsidiary of Air India then nothing stops the Centre from giving away stakes to a State government provided there is a disinvestment policy permitting it.

“But if AIE is not a separate company and is part of Air India, then it must be bifurcated from the parent company as per Sections 391-394 of the Companies Act before it can be disinvested. Since it is a government-owned company, this can be done with the permission of the Union Ministry of Corporate Affairs unlike private companies which need to seek court permission for bifurcation,” he said.

Meanwhile, aviation industry players wonder what good could come of getting a shareholding in AIE, even if that was to happen.

“There’s no point in getting stake in AIE as the problem lies not in its ownership but on the operational side. It would be practical to leverage State government’s influence over the Centre and make AIE operations useful to passengers from here,” said Biji Eapen, national president, IATA Agents’ Association of India. He said the office of AIE in the city continues to have a mere decorative value long after the budget carrier’s base was shifted here during Vayalar Ravi tenure as Civil Aviation Minister.

Ninan John, director, Guiders Aviation and Tourism Academy, said a stake in AIE would at best give the State a foothold in the board of directors. “But, whether that will improve AIE operations remains to be seen. But yes, Kerala will have an edge over other States if its proposal is accepted and, who knows, it may even prove useful whenever Air Kerala project is revived,” he said.

Union Minister of State for Civil Aviation was noncommittal when asked about the probability of conceding a claim of stake by the State.

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