The lawns were teeming with ticket seekers and hangers-on waiting for a glimpse of the newly appointed Minister for Civil Aviation, Mr Ajit Singh.

In between finalising the list of party candidates and dodging people eager to seek his blessing, Mr Singh spoke to Business Line on the issues dogging the aviation sector. Excerpts from the interview:

Passenger traffic is growing at over 17 per cent, yet neither the airlines nor the airports are making money. Your views on this?

The problems are temporary. The market is growing. The future is bright for aviation. The problem lies in the wrong business models of some of the companies. Not all companies are losing money. IndiGo is making money. Some companies are losing money partly because of the current economic environment and partly because of the fare wars, because they wanted to increase their market share. So it is not a problem that was inherited. Routes have also not been rationalised, many routes have to be started.

It is said that Air India, despite lower yields, triggered the fare war. Many industry players felt that this was because of funds support from the Government. Your opinion?

In all competitive environments, fare wars happen. Air India started it, but the problem happened in terms of cost. They could not reduce their cost. Some airlines cut the cost, Kingfisher could not, they got into trouble. But fare war in any competitive environment does happen and then companies realise they cannot afford it.

Another booster could be allowing foreign airlines to pick up equity in domestic carrier. What is the status?

The committee of secretaries has given its recommendation. It will go to an informal Group of Ministers in two three days. The Group will have the Ministers of Finance, Petroleum and Civil Aviation. Ultimately, the Cabinet will decide. Airlines today basically require working capital. They need money. If the foreign companies can invest in these airlines, it is fine.

There are reports that banks are not agreeing to the financial restructuring of Air India?

There are minor differences between the banks and the Government, but they are discussing it and I am hopeful that they will come to an agreement.

Have banks sought a seat on the AI board?

I do not know whether that is one of the demands of the banks. The RBI and the banks are discussing various proposals. The RBI has to approve it. Now if somebody is pumping money into a company, they would want some say. I do not think any body will object to that.

Do you believe that Air India should be downsized and staff salary and perks be lowered?

When it comes to the question of jobs, we need to very careful because it is not the employees' fault that the company is going through a crisis. I know human resources have to be rationalised, the perks and the numbers need to be rationalised. But these have to be done after discussions with the airline. Mr Justice Dharmadhikari is also looking into these issues. So our view is that Air India has to go by industry norms.

How can India make better use of bilateral landing rights?

The first right of refusal should not be unlimited. They (Air India) have to come up with a plan, how and when they can start using it. And don't forget that this is not a static environment. Requirement for more flights will be there.

The DGCA financial surveillance report has thrown up many issues, including rapid capacity expansion. Is the Government thinking of putting in a mechanism to rationalise it?

There are different views on that. We have to analyse them. We have to analyse the way passenger numbers are growing. It is not very clear that there is overcapacity. If a private airline wants to use its money to buy aircraft, who are we to stop that? We hope they have the good sense not to fly empty planes.

Are there any plans to revive the proposal for an airport in Greater Noida?

The existing airport (in Delhi) still has a lot of capacity, and improvements and technological changes are taking place. Today we laid the foundation stone for a new ATC tower at Delhi Airport. With the new facility, the time gap between landing of an aircraft and take off of another will be shortened. More planes will be flying. Then how can we have another airport near this one, that question will also come up. There are a lot of unresolved issues.

What I do feel is that you would need another airport. We have to start discussing it now, as you need 5-10 years to build an airport. On location we have to see the traffic trends in the area from where Delhi Airport draws its crowd. What I feel is that we need feeder airlines. We need small airports in the tier II and III cities.

>Shishir.s@thehindu.co.in

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