Lok Sabha Question No. 840 (UNSTARRED), answered on 2020-02-06
Subject: Poor Financial Condition of Air India Limited
Ministry: CIVIL AVIATION
Asked by: Rajendra Dhedya  Gavit

840.

## GOVERNMENT OF INDIA MINISTRY OF CIVIL AVIATION LOK SABHA

UNSTARRED QUESTION NO. 840 (To be answered 0n the February 2020) 6th

## POOR FINANCIAL CONDITION OF AIR INDIA LIMITED

SHRI RAJENDRA DHEDYA GAVIT

## Will the Minister of CIVIL AVIATION

be pleased to state:-

- Limited with other civil aviation companies and if the corrective steps taken in this regard; along S0,
- (btwhether the iinancial condition of Air India Limited has been worsening for the last several years;
- and if the legal action taken against them; and SO,
- details of criteria adopted for this purpose?

## ANSWER

Minister of State (IC) in the Ministry of CIVIL AVIATION

(Shri Hardeep Singh Puri)

(a): Yes Sir; The high cost %f Aviation Turbine Fuel(ATF), the global economic slow down; low yields due to intense competition are some reasons that have contributed to the widening gap between revenue and expenses (n Stheaairlve growth of the sector The major steps taken by this Ministry to civil aviation sector inter-alia include help

- I Provide airport infrastructure through Airports Authority of India and the private operators
- III; Regulate the aviation industry through Directorate General of Civil Aviation to
- #Provide an efficient Air Navigation System in the Country
- IV. Coordinate with all stakeholders to resolve their issues through regular interactions.
- V. Provide Viability Funding and other concessions to selected airline operators under Regional Connectivity Scheme (RCS) UDAN (Ude Desh ka Aam Gap

Nagrik) as per the scheme document

- VIL Reduction %f Central Excise Duty   applicable on ATF from 14% to 11% Wef Ilth October, 2018.

National Civil Aviation Policy 2016.

- VIILRationalization of Category-I routes under Route Dispersal Guidelines on the basis of criteria given in
- IX. The requirement for 5/20 is modified and all airlines can commence internationai operations provided that they deploy 20 aircraft or 20% of total together) whichever is higher for domestic operations. put
- XI With a view to modernize existing airports $o aS to establish high standards and ease demand pressures on them 1o0% Foreign Direct Investment (FDI) under automatic route has been allowed in brownfield airport projects: This would facilitate the development of domestic aviation infrastructure. FDI for Scheduled Air Transport Servicel Domestic Scheduled Passenger Airline has been allowed upto 49% under automatic route. For Non-Resident Indians (NRIs), 100% FDI will continue to be allowed under automatic route Foreign airlines are allowed to invest in capital of Indian companies operating scheduled and non-scheduled air transport services Up to the limit of 49% 0f their paid up capital; Such investment is subject to the condition, inter- alia, that Scheduled and Non-Scheduled Operator's Permit would be granted to a company the substantial ownership and effective control of which is vested in Indian nationals only
- X; Liberalization of domestic code share points in India within the framework of Air Service Agreements.
- (b) to (d): Air India has been incurring continuous losses and had accumulated huge losses; NITI Aayog in its recommendations, on Strategic Disinvestment of the Central Public Sector Enterprises in 2017 while referring to the fragile finances %f Air India had stated that further financial support in 4 mature and competitive aviation market would not be the best use of scarce financial resources of the Gevernment: The main reasons for the high operating losses of Air India include the following: May,
- High interest burden;
- (iii) Adverse impact of exchange rate variation due to weakening of the Indian Rupee, and
- (i) Increase in competition especially from Iow cost carriers,
- (iv) High operating costs
- (e): Yes Sir; The Government has initiated process of strategic disinvestment of Air india: The Preliminary Information Memorandum (PIM) for inviting Expression of Interest for sale of 100% equity share capital 0f Air India Limited (AIL) 50% shareholding in Air India Airport Services Private Limited (AiSATS) has been issued on 27.01.2020 and is available o the website 0f Ministry of Civil