The Hindu Business Line : Praful Patel assures steps to bail out airline cos

Hyderabad, Oct. 15 The Union Minister for Civil Aviation will meet the Finance Minister and representatives of banks and financial institutions soon in an effort to provide some breathing space and fund support to the struggling aviation industry.

Stating that the crisis is very much on his agenda, Mr Praful Patel said: “We have learnt that the banks are not very happy to lend to the airlines. We will tell them not to put pressure on the airlines.”

Attempt to bail out

As the aviation industry struggles, the Union Government has also got down to help it tide over the crisis. The Ministry will take up some fire-fighting exercise to bail out the industry.

There would not be a cash bail-out package (as in the US).

“We can’t write a cheque,” Mr Patel pointed out at a press conference here on Wednesday after the inauguration of the maiden India Aviation 2008 exposition.

The Prime Minister, Dr Manmohan Singh, recently appointed a committee, headed by the Cabinet Secretary, to find ways to tide over the crisis caused by the slowdown in the economy.

Mr Patel asked the States to emulate Andhra Pradesh, which reduced tax on aviation turbine fuel to 4 per cent last year, and said they should look at the larger picture and see the benefits for the economy.

Jet-Kingfisher tie-up

Responding to the alliance between Jet Airways and Kingfisher, the Minister said it was too early to comment on the development.

“I haven’t heard from them. We don’t have any issue (with the arrangement between the two airlines) if it happens within the purview of various laws and DGCA norms,” he said.

Asked whether it would lead to monopoly and cartelisation, the Minister said the Competition Commission would step in if the deal violated norms.

Investments

Earlier, addressing the inaugural of the conference, Mr Madhavan Nambiar, Civil Aviation Secretary, said that the industry would attract investments of $110 billion by 2020 as it required 1,000 aircraft.

Besides, it would attract another $110 billion for replacement of existing aircraft and establishment of airport infrastructure.

To raise AI equity base

With a view to supporting the huge growth plan of Air India, the Union Government has decided to infuse funds to increase the equity base of the company.

“We have decided to infuse funds in the range of Rs 1,000-1,500 crore to increase the equity base from the present Rs 145 crore,” Mr Patel said.

He said this was important keeping in mind the deferred IPO plans and the aircraft acquisition plan of the public sector carrier.

Besides, the Government would also give Rs 1,000 crore as loan to the carrier for working capital needs.

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