AI sale gathers pace, Niti Aayog takes up SpiceJet's 'industry-wide concerns'

Last Updated: Sat, Sep 28, 2019 10:52 hrs
Air India (PTI image)

New Delhi: As decks are being cleared for privatization of national carrier Air India, government is considering five key suggestions given by Ajay Singh-controlled SpiceJet to make India a global aviation hub.

Niti Aayog, the government's think tank, has written to the Civil Aviation Ministry for giving its recommendation on the five concessions sought by SpiceJet.

Although forwarded by SpiceJet, the suggestions have been termed as recommendation of Indian carriers.

Official sources said that Niti Aayog in a letter to Civil Aviation Ministry last month forwarded the recommendations on "industry-wide concerns and recommendation of Indian carriers for urgent intervention."

The key proposals include bringing jet fuel under GST, making India global aviation hub and developing commercially viable alternate fuel supply. SpiceJet is learnt to have pointed out that foreign airlines ferry 60 per cent of India' international traffic primarily due to scarcity of wide-body aircraft in India.

"Niti Aayog's infrastructure connectivity vertical had written to the Aviation Ministry. The matter is being considered on urgent basis," a source told IANS.

Air India is the only carrier after Jet Airways' shutdown which has wide-body aircraft and is a dominant player on the international routes. Changes in tax regime would make Air India attractive for potential bidders.

While no Indian carrier has so far shown interest in acquiring Air India, experts consider SpiceJet as a strong contender.

Acquisition of Air India will allow a rival carrier to get some of the best flying slots and flying rights to operate international services. The sizeable fleet of Air India would allow the acquirer to instantly strengthen international operations.

A ministerial panel headed by Home Minister Amit Shah is currently working on contours of Air India's disinvestment. The panel held its first meeting last week but could not take any major decision.

Civil Aviation Minister Hardeep Singh Puri, who is a member of the panel, told reporters that another meeting would soon happen to take call on terms of sale.

Among many issues on the meeting agenda was transferring more debt, over and above Rs 29,464 crore decided earlier, to Air India Assets Holdings Ltd (AIAHL) to make the deal attractive for private parties.

The Modi government has put Air India sale on fastback and wants the transaction to complete by this fiscal. Sources have been indicating that government has done its ground work and may be in talks with potential buyer to complete its unfinished agenda.

The government plan to sell Air India failed last year as no private party showed any interest in buying a stake.

Nirbhay Kumar can be contacted at nirbhay.k@ians.in