ai’s future 

Source: The Hitavada      Date: 09 Jan 2018 11:05:29


THE draft report prepared by the Parliamentary Committee on Transport, Tourism and Culture on the critical issue of divestment of national carrier Air India (AI) clearly shows divergence of views between the NITI Ayog and the Parliamentary panel. While the NITI Ayog appears to be keen on divesting some Government stake in the AI, which is chronically debt-ridden and incurring huge losses for years, the Parliamentary Committee seems to be strongly opposed to the move at least for the next five years as it sees some green shoots on the horizon with some of the subsidiaries showing signs of profit, contributing to Air India’s improved performance.

It remains to be seen how the two premier authorities, the Parliamentary panel and the NITI Ayog reconcile with this divergence of views and what will be the approach of the Government on the matter.

While the NITI Ayog has its own reasons to think of divesting some Government stake, the quantum of which will be critical to the ownership, management control of the AI, the Parliament panel does not look at the AI as a mere commercial proposition but sees a larger role for it as the national carrier. To buttress its argument, the Parliamentary committee cites the role of Air India in times of emergencies, not only within the country but also on foreign shores as well. In fact, though the national carrier has turned into a white elephant because of its burgeoning losses for years, the Parliamentary committee describes it as the “national pride” and therefore deserves Government support at least for the next five years.

The Panel’s insistence for a five-year lee-way is based on the ground that the AI had been given ten-year Turnaround Plan (TAP) and Financial Restructuring Plan (FRP) in 2012 which ends in 2022. Hence the premier airlines has still five years to bring about improvement in its operations and profitability.

To that extent the Panel’s argument is justifiable because it has pointed out that the equity infusion done by the Government under TAP was wholly inadequate to meet the growing needs of the ailing airlines, causing much more financial distress to it. This piecemeal approach to shoring up an ailing enterprise would not do. The Government has to do much more to not only keep the national carrier afloat but also to restore it to good health.

As a Government enterprise it was incumbent upon the Government to support the AI to remain competitive in the changing civil aviation scene. Over the last two decades the civil aviation scene has undergone a sea change for the better in the country. While the private airlines made large forays into the growing domestic and overseas markets, taking advantage of the expanding business, at the same time the AI should have been ready to reap the benefit of the conducive conditions. However, it was bogged down by policy changes, to the extent that the AI had to lose several lucrative airlines routes which were later grabbed by private operators. So if the Parliamentary committee puts the blame for the AI being debt-ridden on the Government it is not far from the reality. It is for this reason that the panel has suggested that there should be less Government control.

Thus the Parliamentary Panel has made a strong case for giving Air India a chance to prove itself a commercially viable public sector enterprise like many others. The Government has supported several other public sector enterprises in the past and still continues to do so, notwithstanding the plan to divest some equity from some of the profit-making Public Sector Units (PSU). There, of course, is no denying the fact that all public sector units must contribute to the exchequer and not be a drag on public finances. The days of protection may not last long.