Govt to infuse Rs 800 cr as first tranche of equity in AI

Air India is likely to receive about Rs 800 crore as the first tranche of equity infusion from the government by December, Civil Aviation Minister Praful Patel said.

Govt to infuse Rs 800 cr as first tranche of equity in AI

Air India is likely to receive about Rs 800 crore as the first tranche of equity infusion from the government by December, Civil Aviation Minister Praful Patel said.

In turn, the government would review the progress the national carrier makes in implementing a series of cost-cutting and saving enhancement measures on a monthly basis, he told reporters on the sidelines of a function here. "We will see the first tranche of equity infusion in Air India coming in by December," Patel said, adding that the national carrier was initially looking at around Rs 800 crore for the first two months, Patel said.

His announcement came two days after a meeting of the Group of Ministers, headed by Finance Minister Pranab Mukherjee, on the financial health of Air India and the cost- pruning measures it was implementing. The GoM also approved an interim plan till March which would have to be implemented by the ailing carrier to justify government's support.

Patel had earlier said that government assistance in terms of equity infusion or loans would come in tranches, depending on the airline making a recovery by implementing the cost-cutting measures. "We have decided to put more money but will review progress (of cost-saving measures by the airline) every month," he said.

To questions on relaxing of FDI norms in the aviation sector, Patel said a decision would be taken on the basis of what the industry required. "On the FDI issue, the government will take its decision based on the needs of the sector. It is a larger decision which will be taken in consideration with other ministries and agencies," he said.

The minister, however, did not specify any time line for arriving at the decision on FDI issue, which includes raising of the FDI cap from 49 per cent in the aviation sector and allowing foreign carriers to pick stake in Indian counterparts. He said the worst for aviation industry in India and in the world seemed to be over. "The revival of the sector will be visible by the beginning of 2010."

Regarding the skidding of a Kingfisher aircraft at the Mumbai Airport last Tuesday, Patel said, "Whatever happened (the landing fiasco) was unfortunate. The directions that come from the DGCA or any other authority are always aimed at passenger security."

On the proposal to levy user development fee in Kolkata and Chennai Airport which are being modernised by the Airports Authority of India, Patel said the issue was being referred to the Airport Economics Regulatory Authority for a decision. "All decisions on UDF will now be taken by AERA."