Market conditions made Air India privatisation difficult: Jayant Sinha

The aviation ministry’s principal project of privatising Air India has not yielded any result. However, Minister of State for Civil Aviation Jayant Sinha would not consider it as a failure and says that transformation of the airline is an ongoing process. In an interview with Arindam Majumder, he underlines the achievement of the government in four years saying that civil aviation has been success story in terms of political mileage. Edited excerpts:

Transforming Air India into world class airline is one of the objective of this government. It is also fairly clear that it cannot happen under government ownership. So what is the way forward after the failed disinvestment process?

As minister Suresh Prabhu said it’s the market conditions and industry dynamics that will drive ongoing thinking of the disinvestment process. As you know we ran a process and didn’t receive any bids. Both the market conditions and industry dynamics have gotten appreciably worse right now because of oil prices, high interest rates and currency fluctuations. Due to these reasons, it requires us to evaluate and decide the future course of action. This would be done by AISAM. We will monitor and evaluate market conditions and industry dynamics and make appropriate decision at appropriate time.

But impediments will always remain. There will never be a right time for divestment. Even when the process started last June, the forecast of high oil price was already there. Why blame it on the market conditions?

There is a process we have to undertake and the process takes a lot of time because we had to create asset management company. Decide on the terms of the offer then get all the appropriate approvals and take it through the government process. That naturally takes time. We took the necessary time to make a high integrity and confidential process. Then of course we didn’t receive bids. When the decision was taken, market conditions were much favourable but now the market conditions and industry dynamics are not. So we have to take all these into consideration and move forward.

Do you consider the process a failure?

Everybody is entitled to their views. I would say we undertook the largest strategic disinvestment process ever. We provided a very balanced offer for sale. Of course it ultimately depends on market whether people are willing to acquire 76 per cent in Air India. So, I think government did what is appropriate and necessary. Now, of course we have to evaluate the market response and go forward.

Why do you think there was unfavourable response?

I am not going to speculate into why people bid or not bid. I think we followed high integrity process. All necessary information were made available. The transaction advisor interacted with all interested parties, provided us with their views why no bids came through. We will evaluate and decide on next step.

Is there still time left before upcoming general elections?

I am not going to make a statement on that.

Air India’s performance has not improved for years now. Market share continues to decline, there is no concrete fleet plan. So what is the future of Air India?

I reject all those statements. Air India has gone through a very successful turnaround. On every single parameter that you judge an airline on, it has shown a turnaround. The reason why Air India has struggled because we have a massive debt burden, the merger of the airline was inefficiently done. Plus, there were a series of decisions on bilateral rights which impacted Air India. All these happened in previous government. In our government, we have turned it around remarkably. For the future we have a strategy to improve Air India as a global airline with its network of international destinations. Air India has the fleet, it has the slots. It will provide a refreshed experience to its flyers with its direct flights to global cities across the world.

Has your government done enough to provide aviation as a success plank in the elections?

Aviation has been a great success story for our government. In 48 months we have transformed aviation to make it from an alternative mode of transportation into a mainstream one. By our calculations, 5 crore Indian are now flying in India. Through UDAN we have added 32 airports and every time we opened a new airport, there has been a tremendous response from the citizens about the new connectivity. I will give you the example of Allahabad which will host Kumbh Mela. Allahabad has got many new air connectivity. So imagine the impact of this on Kumbh Mela terms of tourism.  Imagine the impact on Surat’s trade when it gets 20 flights a day. That’s why when these airports get started it is welcomed with so much enthusiasm. So that’s why when these airports are started in terms of political perspective showing the achievement the government, it’s a great boost.

Performance of Air Odisha and Air Deccan has not been up to the mark in terms of running new routes efficiently. Do you think the government needed to be more careful about the financial profile of airlines while awarding routes?

Air Deccan and Air Odisha are good examples of regional carriers. Around the world these carriers exist which provide feeder into metro airports. So if India needs to open around 150-200 regional airports these airlines need to be viable. Government has undertaken a number of steps to make it easier for them to do business. Simplification of process has been done in terms of leasing planes. So everything that needs to be done to facilitate their growth is being done.

The high passenger growth in aviation has led to a teething crisis in airport capacity? Nabh Nirman is a project which will show result in 15-20 years. But what about the immediate solution?

Nabh Nirman is going to quintuple airport capacity in 15-20 years. That’s correct. But we are working every day to improve airport capacity at multiple points. We are working on many fronts like DigiYatra to improve through put or Building new terminals or providing more online check-in. We got rid of baggage tags to fasten check-in process, adding new aerobridges or building new parking stands. In addition to that we are building new runways in brownfield airports to enhance capacity. We are building 12 new airport terminals and 14 new green field airports. So in next five years, if you add up all these, we are investing Rs 1 lakh crore in terms of airport capacity. So whether in short term and medium term or in the long term, we have a well thought out airport expansion policy. We are also thinking in terms of faster mobility to these airports like metro connectivity, highways to a host of airports.