Lok Sabha Question No. 789 (UNSTARRED), answered on 2016-04-28
Subject: Privatization of Air India
Ministry: CIVIL AVIATION
Asked by: SHRIKANT EKNATH SHINDE, Shrirang Appa Barne, THOKCHOM MEINYA, VINAYAK BHAURAO RAUT, DHARMENDRA YADAV, ASHOK MAHADEORAO NETE

## GOVERNMENT OF INDIA MINISTRY OF CIVIL AVIATION LOK SABHA UNSTARRED QUESTION NO. 789 (To be answered on the 28th April 2016)

## PRIVATIZATION OF AIR INDIA

789\_

DR. SHRIKANT EKNATH SHINDE SHRI SHRIRANG APPA BARNE DR THOKCHOM MEINYA SHRI DHARMENDRA YADAV SHRI ASHOK MAHADEORAO NETE

..

## Will the Minister of CIVIL AVIATION

be pleased to state: -

- (a) Whether indebted Air India has seen its market share shrink in recent years and the Finance Ministry has shown reluctance to pump in more funds;
- (b) If s0, the reasons therefor;
- (c) whether Air India was earning an annual profit till 2007, if s0, the details thereof;
- () whether the Union Government proposes to privatize the Air India by selling its 49% shares and if s0, the details thereof;
- (e) whether the Union Government has constituted a committee to consider and prepare a plan for privatizing formalities of Air India;
- (9) if s0, the details thereof and the time by which the committee is likely to submit its report; and
- (g) the income and expenditure of Air India during the last three years and the current year, year-wise and the reasons for losses suffered by Air India?

## ANSWER

Minister of State in the Ministry of CIVIL AVIATION

.

(Dr Mahesh Sharma)

(a) & (b): under:

The domestic market share of Air India in the last 03 years is given as

Year

## Domestic Market Share of Air India

2013-14

19 %

2014-15

18 %

2015-16*

16 %

(Up to Feb 16)

The market share of Air India has declined in the last three years: There has been capacity induction to Air India whereas the capacity of competitor Airlines has grown substantially in the domestic market: The   capacity in domestic market of Air India is not in line with the capacity induction by the competitors The capacity share of Air India in 2013-14 was 17% which has come down to 15% in FY 2015-16.

- (c): Air India Ltd was formed with the merger of erstwhile Indian Airlines and erstwhile Air India Ltd W.e.f: 2007-08. Both these\_erstwhile companies were in profit during 2003-04 to 2005-06. However, during FY 2006-07 both the companies suffered losses. The details of the year-wise ProfitfLoss are as under: given
- (d) and (e): No,
- (f): Does not arise in view of (d) & (e) above:
- (g): The details of Total Revenue, Expenses and Net Loss of Air India for the last three years are given below:

|         | Net Profit/(Loss)   | Net Profit/(Loss)   | (Rs in Crores)   |
|---------|---------------------|---------------------|------------------|
| Year    | Indian Airlines     | Air India Ltd       |                  |
| 2003-04 | 44.17               | 92.33               |                  |
| 2004-05 | 65.61               | 96.36               |                  |
| 2005-06 | 49.50               | 14.94               |                  |
| 2006-07 | (240.29)            | (447.93)            |                  |

| Particulars                  | 2012-13   | 2013-14   | 2014-15   | (Rs: in Crores) 2015-16 (BE)   |
|------------------------------|-----------|-----------|-----------|--------------------------------|
| Total Revenue                | 18213.79  |           | 20606.27  | 21315.00                       |
| Total Expenses               | 23703.95  | 26420.19  | 26466.18  | 23951.00                       |
| Net Profitl (Loss) after Tax | (5490.16) | (6279.60) | (5859.91) | (2636.00)                      |

Air India Ltd has been facing losses in the past few years on account of a multitude of factors The main reasons for the losses of the company are as under:

- High fuel prices
- Increase in competition especially from low cost carriers
- High interest burden
- High Airport User Charges
- Adverse impact of exchange rate variation due to weakening of the Indian Rupee .