Year 1 of aviation ministry: Full of turbulence

Civil aviation minister Praful Patel's second term as the aviation minister has been full of turbulence. When the UPA government started its second term, most of the airline companies were in a bad shape. The global slowdown meant that the airlines were going only one way down.
Passenger figures had dropped dramatically and airlines were slashing fares to stay in the race. Jet Airways cut fares by 40 per cent, but things were about to get worse.
The airlines expected the government to bail the industry out as the budget day approached.
The industry had demanded that aviation turbine fuel be brought under declared goods category, which would have capped tax on ATF at 4 per cent. But their demands were ignored. Instead the government announced a bailout package for Air India.
Air India by mid 2009 had accumulated losses of Rs 5000 crore. Private airlines were certainly unhappy as they wanted a bailout package for the industry and threatened to go on strike for a day.
Patel was back to firefighting and after a high profile meeting with the airline honchos they finally dropped their threat to bring the aviation business to a halt.
Meanwhile the prime minister's office also stepped in and asked Patel to put Air India in order.
The government entered into negotiations with the unions but most talks ended in a deadlock.
Finally, the government decided to issue an ultimatum to the airline shape up or ship out.
Air India did manage to stay airborne with a Rs 800 crore rupee equity infusion and by the end of UPA 2's first year in office, most of the airlines were slowly climbing back into profitability.
17/05/10 Bianca Ghose and Arijit Banerjee/NDTV.com

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Categories: Indian Aviation- In General May 2010