Lok Sabha Question No. 3881 (UNSTARRED), answered on 2018-08-09
Subject: Bidding Process for Sale of Stake in Air India
Ministry: CIVIL AVIATION
Asked by: KURUPPASSERY VARKEY THOMAS, HARISH CHANDRA MEENA, ADVOCATE NARENDRA KESHAV SAWAIKAR, PONGULETI SRINIVASA REDDY, POONAMBEN HEMATBHAI MAADAM, K. GOPAL, C. MAHENDRAN, J. JAYASINGH THIYAGARAJ NATTERJEE

## GUVERNIENT' OF INDIA MINISTRY OF CIVIL AVIATION LOK SABHA

UNSTARRED QUESTIQN NO. : 3881 (To be answered on the August 2018) 9th

## BIDDING PROCESS FOR SALE OF STAKE IN AIR INDIA

3881.

PROF KV. THOMAS SHRI HARISH MEENA ADV. NARENDRA KESHAV SAWAIKAR SHRI PONGULETI SRINIVASA REDDY SHRIMA TI POONAMBEN MAADAM DR K GOPAL SHRI C MAHENDRAN SHRI J.JT: NATTERJEE

Will the Minister of CIVIL AVIATION

be pleased to state:-

- (a)whether no private companies/ airlines have shown Expression of Interest (Eol) in bidding for Air India despite extension of deadline for submission of Government thereto and further action proposed in this regard;
- (c) whether the Government proposes t0 review its decision to privatise or disinvest Air India and explore the possibility of an alternative to disinvestment of the national carrier; if s0, the details thereof and if not; the reasons therefor;
- (b) the present status of the turnaround plan which was made on a piecemeal basis and which adversely affected its financial and operational performance and forcing the airline to take loans at a higher interest rate to meet the shortfall;
- (d) the number of suggestions/requests received by the Government for not selling its stake in Air India from various Experts/ Unions in the recent past along with the present status of such suggestions/requests and the steps taken /being taken by the Government to protect the rights 0f the employees of Air India before announcing its stake sale in it;
- (f) the steps taken by the Government to improve the services of Air India?
- (e) whether the Air India has been asked to consider its fleet requirements and see the number of planes it needed to take on lease to ensure its market share does not eroded further and if so, the details thereof; and get

## ANSWER

## Minister 0f State In the MVinistry ot CIVIL AVIATION

(Shri Jayant Sinha)

(a) and (c): The Preliminary Information Memorandum (PIM) for inviting Expression of Interest (EOI) for the Strategic Disinvestment of Air India including its shareholding in Air India Express and AI SATS was issued on 28th March; 2018. No Eol/ bid was received till the last date 0f receipt of bids The Government remains committed to the disinvestment of Air India: In this regard, the Air India Specific Alternative Mechanism (AISAM) has decided as follows:

- (ii) to undertake near and medium term efforts to capture operational efficiencies and to improve the performance of Air India,

(i) In view of volatile crude prices and adverse fluctuations in exchange rates; the present environment is not conducive to stimulate interest amongst investors for strategic disinvestment of Air India in immediate near future: The issue would be revisited once global economic indicators including oil prices and forex conditions stabilize,

- (iii) to monetise non-core land and building assets,

(b): In order to help Air India in mitigating its continuing losses and to take it back on the path of profitability, the Government has aiready approved and implemented a Turn Around Plan (TAP) and Financial Restructuring Plau (FRP)of Air India in 2012 in terms of which, all Government Guaranteed loans and interests thereon are being by the Government by way of equity infusion into Air India. Similarly, a Financial Restructuring Plan (FRP) has also been implemented by means of which; high cost working capital loans have been converted into long term debt carrying lesser rates 0f interest S0 as to reduce the financial burden on Air India\_ paid

(iv) to separately decide the contours 0f the mode of disposal of the subsidiaries viz. Air India Engineering Services Limited (ATESL), Air India Air Transport Services Limited (AIATSL) and Airline Allied Services Limited (AASL):

The TAPIFRP includes budgetary support amounting to Rs 30,231 crore spread over 10 years i.e. upto FY 2020-21 and also equity support for the payment of principallinterest of the Non-Convertible Debentures. Air India has received an equity infusion of Rs. 27,195.21 crore till date.

(e): In view of Government's decision to divest stake in Air India, expansion plans vis-a-vis fleet inductions were placed on hold:

(d): The Government has received various representations from employee unions of Air India and other persons/groups for not selling the GOI stake in AI: As no bid has been received, any measurelstep required to be taken on this account does not arise at this stage. No Eoll bid was received till the last date of receipt of bids, so the steps required to be taken by the Government to protect the rights of the employees of Air India in this regard does not arise at this stage.

(f): As a part of the Turnaround strategy for Air India Ltd, Air India with the overall support of the Govt has initiated a number of steps in order t0 cut costs and losses These steps, inter-alia, include the following:

- (ii) Induction of brand new aircraft on several domestic & international routes to increase passenger appeal
- (i) Setting up a Route Rationalization Committee to ensure revenue maximization by continuously looking at load factors, revenue yields and competitor fare structure and responding immediately to the same
- (iii) Phasing out & grounding of old fleet
- (v) Introduction of PSS (Passenger Services System) to have a single code and SAP ERP based Solutions
- (iv) Leveraging the assets Of the Company to increase MRO revenue and revenue from Company'$ real estate properties
- (vi) Establishment of Integrated Operations Control Centre and Hub Control Centre in Delhi
- (viii) Induction of the B-787 aircraft on Medium Capacity/Long Haul Routes:
- (vii) Operationalization of subsidiary companies such as AIATSL & AIESL and transfer of manpower and equipment and treating them as Independent Profit Centers
- (ix) Restriction on staff overtime/holiday pay, except when operationally required
- (xi) Restriction on foreign travel
- (x) Encouraging of same return travel to avoid unnecessary hotel expenses. day duty
- (xii) Focus on cargo revenue
- (xiv) Rationalising commission 0f agents
- (xiii) Focus on ancillary revenue
- (xv) Review of loss making routes.