Saturday, July 16, 2016

Air India no longer to remain sole carrier of government staff: Report

BELEAGUERED Air India may soon lose the tag of being the sole carrier of government employees. The civil aviation ministry is fine-tuning a Cabinet note that will allow them to opt for the cheapest fare, regardless of carrier. Currently, government employees can only use other carriers if there is no Air India option.
"The finance ministry, in one of the review meetings, has asked us to abolish this rule mandating Air India for official flights," a senior...
aviation ministry official was quoted as telling a national daily. "We are preparing a Cabinet note, which should reach the Cabinet for approval in 15 days," he added. Air India, in the midst of a government bailout programme, may not have too much sympathy among some members of the government.
Union Minister M Venkaiah Naidu recently expressed his anger on Twitter about missing a meeting because his Air India flight was delayed. As per rules all central government employees must fly Air India on official trips. In case a destination is not connected by Air India, he or she has to apply for an exemption from the civil aviation ministry.
The move may hurt Air India as government employees, given a choice, are most unlikely to go for Air India over its private sector carriers.
In April, then Minister of State for Civil Aviation Mahesh Sharma informed Parliament that Air India may trim losses by more than half to Rs 2,636 crore in FY16 as compared to a net loss of Rs 5,859.91 crore in FY15.
The debt-laden carrier's profits are eroded by hefty interest cost and airport charges while increasing competition from budget carriers is slowing cash flows. Exchange rate variation due to weakening of Indian rupee are reasons for the carrier's estimated net loss of Rs 2,636 crore during 2015-16.
The national carrier was given Rs 30,231-crore lifeline by the Finance Ministry in 2012 under a turnaround plan stretching over a period of nine years to keep it afloat.
This equity infusion also includes the financial support towards repayment of principal as well as interest on government-guaranteed loans taken for aircraft acquisition by the airline.
As per the 2012 Turnaround Plan (TAP), the government will infuse Rs 18,929 crore for repayment of government- guaranteed loans/interest till FY 2010-21, Sharma said.
Till March, the government has already infused Rs 22,280 crore into the carrier as part of the bailout package.
The government has already approved Rs 1,713 crore equity infusion into the carrier for the current fiscal in line with TAP. Despite all these efforts, Lohani said turning-around Air India is a tough task.

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