Monday, February 01, 2021

Govt allocates funds to service Air India debt and regional flights

Air India Asset Holding Limited (AIAHL), subsidiary that houses Air India's debt, and government's flagship Regional Connectivity scheme are the only two major allocations for the aviation ministry in this year's Budget, which was presented by the finance minister today.

While allocation to AIAHL for 2021-22 has increased marginally to Rs 2,268.99 crore from Rs 2,215.50 crore during the current fiscal, allocations for Ude Desh ke Aam Nagrik (UDAN) scheme has reduced from Rs 700 crore from the current year to Rs 600 crore.

The allocation to AIAHL is used to service Air India's working capital debt of over Rs 20,000 crore. Funds allocated to RCS, which are funded by charging a fee to airlines and Airports Authority of India (AAI), are used to subsidise airlines to launch flights to unserved and underserved airports.

According to the aviation ministry budget for the next fiscal, Air India and AAI are also set to raise a total of Rs 9,266.70 crore for the next fiscal. Of the total, Air India will raise Rs 4,127 crore and AAI will raise the rest Rs 5,139.70 crore.

“The companies will raise money to fund their working capital needs,” said a government official, who did not want to be identified.

While the national carrier has been raising funds to meet its requirements, AAI has been raising funds from this year to fund its capital requirements with COVID impacting flow of revenues.

For the 2021-22 fiscal, the government has set a target to divest stake in Air India and helicopter operator Pawan Hans Ltd. The Budget has also announced that the government will continue to privatise operations and management of airports owned by AAI.

Industry observers have welcomed the move to provide incentives to leasing companies and divestment plans, they also say that the sector needs more help from the government.

01/02/21 Mihir Mishra/Economic Times

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