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Civil aviation ministry to focus on bilateral pacts, A-I, IA divestment

The long-delayed bilateral talks with countries on aviation rights will begin this month.

The first interaction will be with Qatar on November 10 and 11, new Civil Aviation Secretary Ravindra Gupta said today.

Bilateral talks on increasing flights and other matters will be held with the United States on November 17 and 18.

He said his priority would be to clear all the pending matters within the ministry and instructions had been issued to minsitry officials to schedule talks, he added.

Gupta indicated that the equity influsion of Rs 10 billion into Air-India would not be possible as the finance ministry was facing a resource crunch especially after the Kargil episode and the devastating cyclone. As regards the Rs 3.25 billion equity for Indian Airlines, that would come into consideration only after a decision was taken on aircraft acquisition.

As regards divestment of Air-India, he said experts would have to see how it could be done. A global advisor would be brought in only after a firm decision on divestment is taken, he added. "The whole thing has to be transparent and a proper procedure has to be followed," he said.

An expert panel on divestment recommended in June that the government reduce its holding in Indian Airlines to 49 per cent, with 10.4 per cent sold to employees and 40.4 per cent to private investors.

Gupta said there were a whole lot of options like going to the capital market, foreign investment, government funding and looking for a strategic partner. It may have to be a mix of all these, he said. "These proposals have been there for some time. The government approach will be to move fast."

In August, the ministry of civil aviation put on hold all policy decisions until completion of the September-October elections. Media reports quoted Gupta as saying that a variety of options including an initial public offering, employee stock options, tapping funds from financial institutions or a combination of these methods would be explored for the divestment of the state equity.

Indian Airlines has faced intense competition from private firms after the government opened up the skies under a liberalisation programme, which started in 1991. Under current policy, foreign investors can hold up to 40 per cent in an Indian domestic airline, but no foreign airline is allowed to hold any equity.

The Disinvestment Commission had recommended that the government offload 40 per cent of its equity in Air-India to a strategic partner and 20 per cent to domestic institutional investors, employees and the public.

Gupta also said the government would attempt to maximize private investments in airports. "There will be demand for new airports. If we can maximize investments, why not do it?" he said.

UNI

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