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Government to expedite Air India’s disinvestment process

The government is looking to speed up the process of the disinvestment of Air India and would be inviting expressions of interest (EoIs) from different groups in the weeks to come.

Civil Aviation Secretary RN Choubey disclosed that an amended EoI for disinvestment in Pawan Hans would also be floated around the same time.

“Our ministry is presently engaged in the important task of finding buyers for Air India, its subsidiaries and Pawan Hans. We are committed to take it forward very fast,” Choubey said.

“We expect that the EoIs for Air India should come out possibly in the next couple of weeks. A revised EoI for Pawan Hans will also be coming forward around the same time,” the Civil Aviation official added.

Last year, the Union Cabinet gave the green light on the privatization of the debt-saddled Air India, which remains operational, thanks to taxpayers’ money.

A group led by Finance Minister Arun Jaitley has been tapped to charter the strategy for Air India’s stake sale.

Choubey explained that India’s domestic air passenger traffic has risen by more than 20% in the last three years. However, because of the rising oil rates, the growth this fiscal is projected to be roughly 17.5%.

“Our country has witnessed the highest domestic passenger growth globally in the last 3-4 years and the nearest rival is some 30-40 per cent behind us. We have been growing over 20 per cent in the last 3 three years. This year we are growing around 17.5 per cent because the fuel prices have gone up,” stated Choubey.

However, Chuoubey said that if oil prices would remain under $80 a barrel, the travel demand is predicted to grow at a compounded annual growth rate (CAGR) of 15% over the next two decades.

The government’s regional air connectivity scheme Udan has also helped bolster traffic growth in the country, Choubey said. He added that as many as 56 new airports have been added to the network in the last two years.

He also reported that many more are set to start operations in the next six to eight months, parallel to the start of the second phase of Udan.

Udan or the Ude Desh Ka Aam Nagarik scheme was initiated by the central government to link India’s unserved and under served airports and the fares under it have been capped at Rs 2,500 for a one hour journey.

Around three and a half years ago, the total number of aircrafts in the country operated by the scheduled airlines was at 395, and Choubey related that they have placed orders for 900-odd aircraft.

“The challenge is we need to double the capacity of our airports every five years to sustain the additional passenger footfall,” he said while appealing to the different carriers to utilize more wide-bodied aircraft such as Airbus A380 to fulfill the mounting demand and deal with concerns over slots at various airports.

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