‘Air India too can get a foreign airline as partner’

Civil aviation minister Praful Patel, already on the campaign trail, returned from his constituency Gondia on Tuesday only to realise that airlines have suddenly hiked fares. Even as he chastised carriers for the increase in fares, that till a week ago seemed affordable for all, he was clear that more competition would correct prices. He was equally emphatic about allowing foreign airlines to pick up equity stakes up to 25 per cent in the merged entity —– Air India & Indian Airlines. “The policy is the same for all,” he told Smita Aggarwal.
Excerpts from the interview:
What is the status of the proposal allowing foreign airlines to take a 25 per cent stake in Indian carriers? Do you think the FDI proposal could have come earlier?

The proposal is lying with the Department of Industrial Policy and Promotion. The decision of the Committee of Secretaries has got deferred. As far as the ministry is concerned, we have proposed 25 per cent equity by foreign carriers, within a sectoral cap of 49 per cent. We thought that Indian carriers should be allowed to grow stronger, build scale and size, before making way for international equity. Air India, Jet Airways, Kingfisher Airlines are big carriers now, with Indigo and SpiceJet coming to that stage. The second reason for fast-tracking the proposal was the hit the financial structure of airlines took last year. To shore up their financial strength and safeguarding against a collapse, we thought we will support the carriers in terms of financial stability.
The National Aviation Company of India Limited, or Air India, is also covered under the proposed policy. The policy is a sector-specific policy covering the public sector company as well. If I had my way, I would have brought Air India in that position by now. I have always been supportive (of disinvestment).

Has the merger process of Air India and Indian been on expected lines? Is there a possibility of a demerger in future?
The merger process has been slower than what I wanted. Unfortunately, the IT integration has been delayed, while manpower integration has happened. I am unhappy with the delay. The people responsible have acted casually in this matter. I have been pushing for it to be taken up at the earliest. However, there is no advantage now of a demerger. Today there can’t be two standalone international and domestic carriers.
12/02/09 Smita Aggarwal/Indian Express

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Categories: Foreign Feb 2009, NACIL Feb 2009