Govt decides to permit foreign shareholding in Air India

PANAJI, MARCH 31: The Union Government has finally decided to permit a foreign strategic investor to take up equity in Air India. The deci...

PANAJI, MARCH 31: The Union Government has finally decided to permit a foreign strategic investor to take up equity in Air India. The decision was announced by Union Minister for Civil Aviation Sharad Yadav here on Friday.

The parliamentary consultative committee on civil aviation which met in Goa earlier this week, however, recommended that the government retain management control of the airline. Yadav also informed that the government is coming out with a Voluntary Retirement Scheme (VRS) for the employees of India’s national flag carrier. The minister hopes that at least 1000 employees will avail of this scheme.

Yadav, however, clarified that licenced personnel like pilots and engineers would not be covered by the scheme.

According to Yadav, Air India has more than too employees per aircraft as against 250 employees per aircraft.

He further noted that Air India’s wage bill rose from Rs 250 crore in 1989-90 to Rs 1165 crore in 1999-2000. Of this, pilots and engineers who form just 7 per cent of the airline’s work force account for 45 per cent of the wage bill.

The minister noted that Air India has a low paid up capital of Rs 153 crore. The Disinvestment Commission had recommended that an infusion of Rs 1000 crore is required to revive the ailing airline. The government is still looking at ways and means to raise the money, Sharad Yadav said. Air India has been losing money consistently. In 1996-97, its loss was Rs 296 crore. The following year it came down to Rs 174.48 crore. In the last financial year (till December 1999), the airline’s loss stood at Rs 71 crore, he said.

Sharad Yadav informed reporters that the government was committed to keeping foreign airlines outside the domestic market. "We will not allow foreign airlines in the domestic market," Yadav categorically stated.

Story continues below this ad

The Union Cabinet has decided to build an international airport at Mopa in Goa. The airport which will be constructed on the border with Sindhudurg district of Maharashtra will be built on a Build, Own, Operate, Transfer (BOOT) basis.

In addition to this, the working hours of Goa’s existing airport at Dabolim will be extended. Henceforth, it will be open for civilian traffic for 18 hours a day. The rest of the time, it will be reserved for the Navy which controls the airport.