Civil aviation minister Ajit Singh on Wednesday said that there would be no government bailout for private airlines, even as he put state-owned Air India on a different footing.
''The government is not in a position and will not bail out any private airlines. AI is a public sector unit, so the government has an obligation. But AI will have to become competitive and restructure their costs as the government cannot keep on pouring money,'' he said after laying the foundation stone for Delhi airport's new air traffic control tower.
Fearing continued losses, banks have gone back on their decision to restructure loans to the tune of Rs21,000 crore to the national carrier. "There was a hitch in the plan given by SBI Caps, but I think it will work out," Singh said. AI has total debt of Rs43,777 crore, and owes to oil companies, airport operators and other vendors.
Asked about the demands by private airlines (particularly Kingfisher Airlines) for a bailout package, he said they will have to come up with a viable business plan. ''If the banks are satisfied with their plans and think they can recover their money, then they will lend money,'' Singh said.
Singh also confirmed that a committee of secretaries has said foreign airlines may be allowed to invest in Indian carriers up to 49 per cent, and now this proposal would be taken up by a group of ministers. As of now, foreign carriers are barred from investing in Indian airlines and some domestic carriers - especially Kingfisher Airlines - have been pushing for this policy intervention to get much needed funds.
About safety lapses by airlines due to their poor financial condition, the minister said, ''There are problems. The industry has grown so fast in past few years. There is shortage of trainee pilots, of stewardesses. But as far as question of jeopardising the safety of passengers is concerned, there is no such fear. There is no compromise.''
A few hours after Singh's statement Kingfisher Airlines chairman Vijay Mallya told reporters that the government should permit foreign airlines to hold 49 per cent in Indian carriers. "This is not like FDI in retail. This is already permitted. But why should you restrict a foreign airline? What is the sense? Cent per cent (foreign investment) in airports is allowed. Why make 26 per cent? Why restrict?" he said after a meeting with the director general of foreign trade.
The meeting was described as a "follow-up" to the proposal to directly import jet fuel. From all indications, the commerce department seemed inclined to permit Kingfisher to ship aviation fuel, although oil companies are learnt to have opposed the proposal. A final decision is expected to be taken next week.