AIR INDIA needs a bailout of nearly £376m to keep flying, India’s civil aviation minister said in remarks published today, in which he added he was certain the loss-making airline would survive.
The flagship airline, which posted a £62m loss for the fiscal year ended March 31, and other Indian carriers have been hit by overcapacity in the industry and a sharp drop in passengers due to the economic slowdown.
"The airline will survive. Every time it was in trouble the problems were rolled over, and we will roll over this time also," Praful Patel told India’s Business Standard newspaper.
Patel said he did not want the government to have to bail out the state-run carrier but added that "we have to do certain things as shareholders" of the airline.
"Air India should be sold, but I’ve been asked to keep it going," he told the newspaper.
"The airline needs a Rs30bn (£375m) equity infusion and the conversion of high-cost debt to low-cost debt to keep it going," Patel added.
The airline has been seeking financial aid from the government along with soft loans to remain afloat.
A decision by Patel to allow more private carriers to fly in India’s skies has undercut the airline’s competitive position and has led to criticism from trade unions that he has endangered the airline’s survival.
Patel said his decision was to promote the overall growth of the aviation industry.
"Do not see me as a minister for Air India," he told the newspaper.
Patel added that he supported demands by airlines for a cut in state taxes – which range up to 30 per cent on aviation fuel – that many carriers have blamed for heavy losses.
"I want this reduced for both low-cost and full-service carriers," he said. "I have always advocated a uniform tax on jet fuel."
In a bid to cut costs Air India recently announced it would halve productivity-linked incentive payments for its 31,000 employees and also slash crew flying allowances by 50 per cent.
The moves are part of a turnaround programme announced by the carrier that also includes moves to attract more budget customers and plans to rationalise its fleet and network.
