1-year deadline for AI, IA disinvestment

While the disinvestment in Indian Airlines (IA) will be carried-out along the lines suggested by the Kelkar committee report, Air India’s (AI) disinvestment will be along the lines suggested by the Disinvestment Commission, the minister announced.

The Government will start with a financial and organisational restructuring of the two airlines.

The process of disinvestment will then be carried-out within the time frame of one year. It will include appointment of an international consultant to identify a strategic partner for Air India.

The minister said that he has held a series ofmeetings with the AI and IA management and unions over the past few months on the exact nature of the disinvestment.

Kumar emphasised that his ministry favoured complete rationalisation of the entire civil aviation sector by reducing costs. "I favour democratisation of civil aviation. Aviation is still an elitist sector in India. By connecting regional metros through airlines, this elitist tag can be removed," said Kumar.

The minister said that while the parking and landing fees at airports will be slashed by the civil aviation ministry, several other factors contributed to the very high operating costs in the aviation sector.

"The operating costs of flying in India are 86 per cent of total costs. This is of serious concern to us" said Kumar.

The civil aviation ministry is in discussions with the finance ministry for a reduction in the operating costs to 65 per cent. Amongst the various issues being discussed between the two ministries is the reduction of withholding tax and the inland air traveltax.

Kumar has also approached the ministry of petroleum for dismantling of the administered price mechanism for aviation turbine fuel (ATF). "The high cost of ATF for domestic airlines subsidises kerosene" said Kumar.