The Hindu Business Line : Govt to consider initial public offer for Air India

“The IPO would, however, not affect the public sector character of the airline and it will not be privatised.” — Mr Praful Patel, Civil Aviation Minister

Our Bureau

New Delhi, June 1 The Government will consider an initial public offer to infuse funds in Air India, the Civil Aviation Minister, Mr Praful Patel, said here on Monday without defining any time-frame for the IPO.

Air India has approached the Government seeking an additional equity infusion of Rs 1,231 crore and a soft loan worth Rs 2,750 crore.

The total losses for 2008-09 of National Aviation Company of India Ltd (NACIL), the holding company formed after the merger of Air India and Indian Airlines, is estimated at Rs 4,000 crore, up from Rs 2,226 crore in 2007-08.

“The IPO would, however, not affect the public sector character of the airline and it will not be privatised,” Mr Patel told reporters here after taking charge of the Ministry for the second consecutive term. He gave the examples of SBI, LIC, ONGC and IOC that have gone in for equity infusion without losing their state-owned character.

“This is one area of intent... it (IPO) will bring in much-needed liquidity infusion and also accountability,” he said when asked about the time frame.

Existing airports

On upgradation and modernisation of airports and related infrastructure, the Minister made it clear that none of the existing airports, operated by the Airports Authority of India, would be divested or privatised. The private sector is free to invest in greenfield airports.

“We are not going to go for any more disinvestment or take the PPP (private-public partnership) route for any more airports,” he said.

Noting that the Airports Authority of India was developing two major airports of Kolkata and Chennai, he said, “We want to let AAI have a good level-playing field. They are also developing major airports at Amritsar and Ahmedabad, besides the non-metro airports.”

On building new airports at Navi Mumbai, Pune and Kannur, Mr Patel said the bidding for selection of developers “will be over latest by 2011”.

On Nagpur airport, he said the joint venture firm Maharashtra Airport Development Corporation was expected to soon begin the bidding process, while work was on to develop the aerotropolis project in the Durgapur-Asansol region of West Bengal.

FDI norms

On further liberalisation of Foreign Direct Investment norms in the aviation sector and allowing foreign airlines to pick stake in Indian carriers, the Minister said, “We already allow 49 per cent FDI, barring investment by foreign airlines,” but added that “change with continuity” would be brought about in policies depending on the evolving needs of the sector.

Mr Patel further said the Centre would consider rationalisation of taxes and continue to ask State governments to reduce sales tax on jet fuel. The Government would also make Airport Economic Regulatory Authority functional soon and later consider expanding its scope further.