The Hindu Business Line : Ministry to move note on recapitalising IA, AI

THE coming weeks are likely to be crucial for the aviation sector. The Ministry of Civil Aviation not only plans to move a Cabinet note seeking its approval to recapitalise the two cash-starved state-owned airlines - Air India (AI) and Indian Airlines (IA) — but some forward movement is also expected on allowing the country's private sector airlines to start operations to more international destinations.

Official sources were, however, elusive when asked whether the recapitalisation plan would be linked to the fleet acquisition proposals of the two airlines. "Ideally, the recapitalisation plan should be linked to acquisition. However, no final view has yet been taken on this issue or on matters relating to what quantum of funds should be infused into the two airlines," official sources said.

A meeting is expected to take place next week in the Ministry of Civil Aviation to thrash out these and some other issues, sources indicated. At present, the paid up capital of IA stands at Rs 105.19 crore while that of AI is Rs 153.84 crore.

On the issue of allowing Indian private sector airlines to operate to more foreign destinations, sources said that a final view on the issue would be taken only after consultations have been held at the highest level of the Government. However, officials were clear that while the Government is all for allowing private sector airlines to operate to more routes abroad, a decision on this crucial issue was "not likely to be taken in the next fortnight or so."

Sources felt that there was "not much justification" in not allowing private airlines from India into the global arena when the Indian Government grants concessions to foreign airlines during the peak season when passenger demand outstrips the existing number of air seats available.