Financial Daily from THE HINDU group of publications
Tuesday, Sep 27, 2005
Financial Daily from THE HINDU group of publications Tuesday, Sep 27, 2005 |
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Airlines `Domestic carriers should expand equity base' Our Bureau
The Minister for Civil Aviation, Mr Praful Patel, with the Kingfisher Airlines Chairman & Managing Director, Mr Vijay Mallya, and the Air India Chairman & Managing Director, Mr V. Thulasidas, at a CII conference in Mumbai on Monday. — Paul Noronha
Mumbai , Sept. 26 DOMESTIC airline companies should commit more resources to expand their equity base, according to Mr Praful Patel, Minister for Civil Aviation. He said unless airlines had healthy balance sheets it would be difficult for them to survive and take on the competition in the sector. "Indian aviation is not mature, it needs strength, capital and size to take on competition," Mr Patel said at a CII-organised conference, `Open Skies 2005,' here on Monday. He said both Air India, with an equity base of Rs 153 crore, and Indian Airline with Rs 105 crore, had inadequate equity and would go in for IPOs to strengthen their capital base. This was crucial to their survival as independent companies. The Government would offer them letters of comfort in their attempt to raise resources, he said, ruling out any physical injection of funds in the two public sector airlines. At the same time, he cautioned against the trend among companies entering the market to go in for unrealistic valuations. Airport modernisation: The upgradation of Mumbai and Delhi airports through the joint venture route is on track. The Government had held talks with employees of the Airports Authority of India (AAI), who were told that the modernisation process would throw up new opportunities and jobs. He urged the employees to act in a manner that would protect the larger interests of the industry. Commenting on the incidence of high airport user charges, Mr Patel said the Government would soon form the Airport Economic Regulatory Authority (AERA), on the lines of the Telecom Regulatory Authority of India (TRAI), which would rule on such issues. `Focus on freighters': Acknowledging the lack of cargo and freighter services, Mr Patel urged airline companies to look at operating freighters, and assured them of sops for setting up such operations. "There is a need to develop cargo and freight services in a holistic manner." The Ministry is due to hold a meeting with freight forwarders to get their view on this issue. He said the Government has decided to develop Nagpur, the geographical centre of the country, for setting up the integrated multi-modal cargo hub. Indian Airlines would base its freighter operations out of the city, he said. Facilities for perishable cargo exports are also non-existent and there is a need to develop a network of such facilities. High tax on ATF: The Ministry had requested the Government to take up the issue of high taxes imposed on aviation turbine fuel as well as the need to extend the exemption on withholding tax on aircraft leases, which ends on September 30, he added. The Government, he said, would not just develop airport infrastructure but also encourage more MROs (maintenance, repair, and overhaul facilities) as well training centres for pilots and ATCs.
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