New Delhi: After years of deliberations and closed door meetings, the nearly two-decade old plan of Air India disinvestment is finally taking shape. Union Civil Aviation Minister Gajapathi Raju is at the helm of turning around this massive “debt trap”.
In an interview to News18, Raju talks in detail about the major disinvestment process, disclosing that an international player has expressed interest in buying out the national carrier’s foreign operations. He also admits that Air India’s debt may, after close scrutiny, come out to be substantially higher than the popularly believed Rs 50,000 crore sum.
Edited Excerpts:
Let’s begin with Air India’s disinvestment process. So far, it seems that only IndiGo has formally expressed interest in the disinvestment.
Yes, Indigo submitted a letter to me the day we announced Air India disinvestment. They gave me a letter saying they are interested in the foreign operations. Another foreign operator has also shown interest in buying 49% stake. So there is certainly a lot of interest.
How much do you think will disinvestment help in getting rid of Air India’s huge debt?
When our exercise of calculating Air India’s debt began, we found that the sum was hovering around the Rs 50,000-mark. But I won’t be surprised if the total debt reaches Rs 70,000 crore. Since people are looking at the books carefully, they may find more.
According to me, Air India is a debt trap. I said as much in Parliament as well.
As far as our account books are concerned, we held an internal meeting where we saw that this accounting year is sorted for us as a part of our own dividends which we get that will be used up. Next accounting year needs to be looked into.
One of your ministry’s big schemes is the UDAAN. It seems to have generated quite a lot of interest as far as regional connectivity is concerned. And now you’ve launched UDAAN II as well. How much financial backup will you need for this? Have you spoken to the Finance Minister to accommodate funds for this in his upcoming Budget?
UDAAN is a scheme that the government is proud of. In the political context, hardly anybody’s manifesto talked about these issues — about increasing regional air connectivity. But for us, it has become an expression of good intent.
Regional players have also come forward to help boost regional air connectivity. For instance, I mooted a proposal to several Chief Ministers and asked them to bring the rate of Aviation Turbine Fuel (ATF) down, but a lot of them seemed skeptical.
As I was discussing this with the Andhra Chief Minister, I told him that the ATF needs to be taxed maximum at 2% and minimum at 1%. So he went at 1%. The result was sudden spurt of activity there. Now most states have come on board to keep ATF at 1% under regional connectivity, and look at how the aviation sector is buzzing with activity now.
Now as far as UDAAN itself is concerned, in the first phase we started expanding with 36 airports and helipads and now we have added 56 airports and helipads to that number. So yes we will need money.
We are looking at Rs 620 crore for UDAAN’s Phase 2, and we feel that of that sum we will need Rs 200 crore for this accounting year. For that, Finance Ministry has allowed to take the dividends that is normally paid by the Airports Authority of India. It is actually government money only filed as a return. The budgetary angle is not there. Next year, what to do is the question.
You see, these are things that require viability gap funding. Now a viability gap funding is not for eternity, it takes about 2+ years to stabilise the route, so the maximum that is given is three years. What is encouraging is that in round 1 and 2 of UDAAN, no airline asked for a viability gap funding.
Operations at a lot of airports under the UDAAN scheme are ready to take off, but in a lot of cases, critics have pointed out environmental concerns.
Yes, there are airports like Mopa in Goa, Bhogapuram in Andhra Pradesh, Navi Mumbai and Kannnur in Kerala that are almost ready.
But some people are simply opposed to airports. True, it is a polluting activity, that needs to come down, but ultimately it’s a trade-off. You cannot stop the economy and say that we cannot undertake any developmental activities and take the country back to the Stone Age.
Environmentalists will also not approve of this. We are a signatory to the Paris climate accord and are very serious about environmental concerns.
Till the time operations begin at the new airports, some of the airports in metropolitan cities are beset with congestion problems. How are you planning to deal with this situation?
Our basic problem today is the congestion at Mumbai and Delhi. As far as regional connectivity goes, Hindon airport has been offered by the Ministry of Defence, but that is only a temporary solution.
Navi Mumbai is a real problem. We need to see if we can develop some temporary decongestion strategy which will not affect passengers. That will mean bigger aircraft. What are the routes that can support it, we need to see because Navi Mumbai will take time. But it is a premier city and we can’t ignore it.
Here in Delhi, the problem is a little different.
Transition from T2 to T1 was supposed to happen in February last year. Internationally, it’s the airport operator that takes these decisions. We have had extensive talks lasting four months, which I think is ridiculous. We had given them a last deadline of January 4, post which IndiGo had moved court. The court gave them a deadline of February 15. They have filed a review petition. The court has reserved orders on the review petition. So now, we’re involved with legal wrangles. Let’s hope we don’t see a repeat of Mumbai stampede because of all this dilly dallying.
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