New Delhi: Privatising Air India is not a choice but the only way forward, Union Minister for Civil Aviation Hardeep Singh Puri said Tuesday.
“It is impossible to service the level of debt burden that Air India is currently dealing with. I wake up to the challenge of privatising Air India every day,” he said at ThePrint’s Off The Cuff in Delhi.
Puri, who is also the minister for housing & urban affairs and minister of state for commerce and industry, was in conversation with ThePrint Editor-in-chief Shekhar Gupta.
Speaking about the civil aviation industry at large, the minister noted that domestic air traffic posted double-digit growth in November for the first time since December 2018.
Puri also spoke about how the sector had the potential to emerge as one of the “critical drivers of Indian economic growth”, and the government’s aim to double domestic and international airports in India over the next three to five years.
The Air India conundrum
At the event, Hardeep Singh Puri said Air India was a “profit making organisation till the merger of Air India and Indian Airlines”.
Gupta, however, pointed out, “It (Air India) was sometimes profitable but most times not.”
A large section of Puri’s arguments focussed on the idea that though the fundamentals of Air India have improved over the past couple of years, it was impossible to run it with the scale of debt the company has accumulated.
“I am very proud of Air India… It is a first-class asset. It has had an excellent safety record, very good engineers and cabin crew,” said the minister.
Air India has picked up in the recent times, Puri said, highlighting increasing frequency of flights to key international destinations.
“But is it possible to run an airline with the kind of figures we are dealing with? You cannot continue to service a debt burden of that magnitude,” said Puri.
Air India’s total debt reportedly stands at nearly Rs 60,000 crore.
Despite several attempts, the Narendra Modi government has not succeeded in finding a buyer for Air India. In that context, Gupta asked if Puri would be able to find a buyer this time.
“I am 100 per cent sure that we have no other option but to succeed,” the minister said, adding that selling Air India was “not a choice, and it was the only way ahead”.
After a similar comment by him in Parliament had led to a major political backlash. Speaking about it, Puri said this statement “should have been made ten years ago”.
Asked if the Air India disinvestment will be completed by this fiscal, Puri said, “We are working under a fixed deadline, but can’t comment on the exact time.”
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Driving economic growth
The civil aviation growth in India has been dismal over the past year, especially since Jet Airways stopped operations this year. Earlier in April, domestic air traffic in the country had contracted by 4.5 per cent in a stark contrast from the usual double-digit growth.
Hardeep Singh Puri, however, said the “worst is behind us” as he noted that domestic air traffic posted double-digit growth in November.
The minister also spoke about how the Modi government plans to further boost the civil aviation sector in India.
“We have 137 airports right now, and 35 deal with international traffic,” said Puri. “In 3-5 years’ time, we will have double the number of domestic and international airports.”
Talking about the steady growth in this sector, Puri remarked, “When Jet Airways ceased operations, we had 560-70 civil aviation airplanes in the sky, and today we have 690.
“Today when you discuss the aviation sector, we talk about 490 million passengers. I am a bit of an optimist and I would say we should start looking at a billion passengers in the medium-term.”
‘Huge admiration for people who run airlines’
Speaking about the difficulties of running an airline, Hardeep Singh Puri expressed admiration for people who run these businesses.
“The guys who run the airport will make money through landing rights and duty-free shops. Ola and Uber, who are tied to the aviation ecosystem, also make money,” said Puri. “But it is more difficult an airline that it is run to an airport.”
He spoke about how airlines have to evaluate every route in terms of demand, and any route where the load is less than 80 per cent, the “alarm bells start going off”.
In a lighter vein, Puri joked that whoever has served as housing and urban affairs minister in India has done really well after demitting office, but the picture hasn’t been as rosy for former civil aviation ministers.
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Der lagi aane mein tumko, Shukar hai phir bhi aaye toh. Air India should have been sold / privatised when G V Ramakrishna looked after disinvestment. Certainly before it was hit by a SAM called Praful Patel.