Ajit rejects bail-out for private airlines
No help for Kingfisher, stern warning for Air India
Civil Aviation Minister Ajit Singh on Wednesday ruled out bailing out private airlines, and asked the government-owned Air India which has been losing money, to pull up its socks.
Speaking to reporters after laying the foundation stone for a new ATC tower at the Indira Gandhi International Airport here, Singh said a group of ministers (GoM) will soon meet to decide on allowing foreign entities to pick up stakes in the airline sector in India.
On Kingfisher Airline seeking bailout from the government, the minister said: “It's a private enterprise and the banks can only lend if they are satisfied with the business plan of the company.”
Kingfisher owner Vijay Mallya had last week written to the minister seeking a bail-out as he said the struggling airline would not be able to sustain the present scale of operations if it did not get funding soon. “So, they have to give the business plan and if the banks feel they can recover their money and make profits, they will lend money. Otherwise they wont,” said Singh.
He added: "The government is not in a position (to) and will not, bail out any private airline. Air India is a public sector unit, so government has an obligation. But Air India will have to become competitive and restructure their costs... as the government cannot keep on pouring money (into it).”
The minister had said on Tuesday that there was “some hitch” in Air India's restructuring plan by SBI Caps, raised by the banks. This would be resolved jointly by Civil Aviation Secretary and Finance Secretary, he said.
Asked about the aviation regulator’s safety audit which has brought out an alarming array of compromises by airlines on this aspect, the minister said, “There are problems. Industry has grown so fast in past few years. There is shortage of trainee pilots, of es... there are financial implications...”
Responding to questions on FDI in airlines, he said “Finally, the Cabinet will take the decision. The Committee of Secretaries has already recommended raising the FDI limits in the sector.”
