Thursday, June 29, 2017

Subsidising Air India not sustainable, says aviation think tank CAPA

Subsidising Air India by pumping in hundreds of millions of dollars is neither sustainable nor desirable, aviation think tank CAPA said today, the day when the government decided to disinvest its stake in the carrier. The national carrier, which has a debt burden of more than Rs 52,000 crore, is staying afloat on taxpayers’ money. “Subsidising Air India to the tune of hundreds of millions of dollars a year is neither sustainable nor desirable for a government which has so many other pressing economic and social priorities,” CAPA said in a report today. The government’s role as a major operator in the aviation sector through its ownership of Air India and the Airports Authority of India will continue to be a negative influence on policy outcomes, the report further noted. CAPA also said that in such a highly competitive and challenging environment, Air India cannot continue to be funded by taxpayers to fight private capital. “The national carrier has already absorbed  $3.75 billion of equity from the government with no end to the need for subsidies in sight,” it added. The Union Cabinet today gave “in-principle” approval for Air India disinvestment and the modalities are to be decided by a group of ministers.
The CAPA report, released before the announcement of the Cabinet decision, said the government appears willing to consider privatisation of Air India, “a far-reaching and highly positive reform”. According to the report, the airline’s small operating profit in financial year 2016 was viewed in some quarters as a sign that it had turned around.
28/06/17 PTI/Financial Express