NEW DELHI: After their “ill-fated” merger in 2007, erstwhile Air India and Indian Airlines lost Rs 83,000 crore. In the 14 years since then, successive governments pumped in Rs 55,000 crore as equity and gave guarantee of Rs 50,000 crore. Combined with debt and other liabilities, said aviation minister Jyotiraditya Scindia, AI’s total bill had risen to Rs 2. 7 lakh crore with losses increasing by Rs 20 crore per day. Scindia spoke to TOI on how AI divestment was achieved and what will it take for airlines in India to emerge from deep losses given the country’s high operating cost structure:
How did you finally manage to divest Air India?
It was a very big responsibility to ensure that it is successfully concluded this time. The entire credit goes to PM Narendra Modi for his steadfast commitment that we can no longer service such a large loss-making enterprise and fritter away the nation’s precious resources just to ensure we have a government airline. AI divestment had to be done for the good of the nation.
Were there moments when you felt AI divestment may not happen this time too?
There were many a times when so-called impediments emerged. For example, the company was a complex one from accounting perspective. Therefore, to be able to consolidate all books of accounts, close them and come up with final figures for the auditors took a lot of diligent work. I thank all officials of AI, ministries of aviation and finance and Dipam. We were successful due to the very open nature and consultative process.
Have the Tatas indicated if they will have one mega airline or separate low-cost and full-service carriers?
I am very confident of Tatas’ strength in various fields. They will take the right (call for AI). That is their prerogative. Under them, it will regain its commandeering share of the skies once again. I congratulate them.
While AI has been sold off, every airline in India is making huge losses. . .
We have gone through a very difficult time due to Covid. Jet fuel accounts for 38. 9% of an Indian airline’s total cost structure and takes away the same percentage of their revenue. Since taking over in July 2021, I have been working with states to lower their VAT on aviation turbine fuel. When I took over, 12 states and UTs had VAT on ATF in the range of 1-5% and 24 in the range of 1530%. I am pleased to report that those numbers have changed. Now 23 states/UTs have VAT on ATF in the range of 1-5% and 13 in the range of 15-30%. Other states will also lower VAT once they understand the benefit that will accrue in terms of increased revenue through higher uplift.
When can scheduled international flights resume?
I hope in days to come, Omicron recedes. Domestic and international civil aviation should revert to normal. I am extremely keen to ensure we go back to100% capacity. I am watching the situation on a daily basis.
How did you finally manage to divest Air India?
It was a very big responsibility to ensure that it is successfully concluded this time. The entire credit goes to PM Narendra Modi for his steadfast commitment that we can no longer service such a large loss-making enterprise and fritter away the nation’s precious resources just to ensure we have a government airline. AI divestment had to be done for the good of the nation.
Were there moments when you felt AI divestment may not happen this time too?
There were many a times when so-called impediments emerged. For example, the company was a complex one from accounting perspective. Therefore, to be able to consolidate all books of accounts, close them and come up with final figures for the auditors took a lot of diligent work. I thank all officials of AI, ministries of aviation and finance and Dipam. We were successful due to the very open nature and consultative process.
Have the Tatas indicated if they will have one mega airline or separate low-cost and full-service carriers?
I am very confident of Tatas’ strength in various fields. They will take the right (call for AI). That is their prerogative. Under them, it will regain its commandeering share of the skies once again. I congratulate them.
While AI has been sold off, every airline in India is making huge losses. . .
We have gone through a very difficult time due to Covid. Jet fuel accounts for 38. 9% of an Indian airline’s total cost structure and takes away the same percentage of their revenue. Since taking over in July 2021, I have been working with states to lower their VAT on aviation turbine fuel. When I took over, 12 states and UTs had VAT on ATF in the range of 1-5% and 24 in the range of 1530%. I am pleased to report that those numbers have changed. Now 23 states/UTs have VAT on ATF in the range of 1-5% and 13 in the range of 15-30%. Other states will also lower VAT once they understand the benefit that will accrue in terms of increased revenue through higher uplift.
When can scheduled international flights resume?
I hope in days to come, Omicron recedes. Domestic and international civil aviation should revert to normal. I am extremely keen to ensure we go back to100% capacity. I am watching the situation on a daily basis.
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