Air India can no longer remain under Government ownership and must be privatised with a strategic airline partner, says a white paper on the Indian aviation Industry prepared by the Associated Chambers of Commerce and Industry of India (Assocham).
“A strong foreign airline should be inducted as a 26 per cent and eventually 49 per cent strategic partner,” the paper says. “As Air India has turned around and emerges as a viable and competitive airline, the Government can further divest its stake to 26 per cent with the balance 25 per cent being held by private Indian interests or other stakeholder public sector units.”
It further recommends the setting up of a council for the future of the airline and establishing a plan within six-to-nine months, outlining the circumstances under which the privatisation will be possible as also the structure of the privatisation model.
Interestingly, Assocham’s suggestion comes soon after the draft civil aviation policy, released by the Ministry of Civil Aviation, suggested that an expert committee will be set up to develop a future road map for the state-owned carrier.
The paper also calls for transferring the airline’s real estate assets to a separate entity, along with the non-aircraft related debt. “This will effectively provide the airline operating entity with a one-time write off on non-aircraft debt, after which it should become self-funding. Value generated from the real estate assets could be used to pay down or service the debt and fund the retrenchment programme.”
Assocham’s Aviation and Infrastructure Council is headed by Narayan Rao, who is also a Director with the Delhi International Airport Ltd, the GMR-led consortium that runs Delhi airport.
Pointing out that the Airports Authority of India requires a new business model, the chamber suggests that the State-owned operator should look at establishing a separate airport management company and bring in an Indian or international joint venture partner to support the activity.