Julian Moxon/MUMBAI Mehar Singh/NEW DELHI
India's new coalition government has announced the privatisation of Indian Airlines, opening one of the world's largest domestic carriers to investors. Foreign airlines will be barred from the bidding process, however.
In a parallel move by prime minister Atal Behari Vajpayee, five of the subcontinent's major airports - Bangalore, Calcutta, Chennai, Mumbai and New Delhi - will also be "sold" on leases of between 30 and 51 years. Again, however, foreign airlines - and airport operators - will not be allowed to bid.
The twin initiatives are part of a new draft aviation policy reflecting moves towards a more liberalised air transport regime and due for parliamentary approval by the second quarter.
The privatisation of Indian Airlines was announced in 1998, but has been continually delayed. Under the new plan, spanning three years, 26% of the carrier will go to a "joint venture or strategic investor", to be given a "free hand" in running it. Domestic carriers such as privately owned Jet Airways and Sahara Airlines are free to bid, but no offers must involve more than 40% of foreign equity. Another 25% will go to the workforce, financial institutions and the public, with the remaining 49% expected to be sold later.
Indian Airlines, which, with regional partner Alliance Air, operates to 57 domestic and 17 international destinations with 46 jets and 15 turboprops, has made a small profit in the last two years after many years of losses. A fresh capital injection of Rs3.25 billion ($75 million) was provided by the government last May.
The government plans to retain "sovereign rights" over the running of the privatised airports and will set up a regulatory authority to control their operation. Much will depend on the constitution of the new civil aviation authority, which will replace the Airports Authority of India.
Bringing the five airports up to an acceptable standard will require an "enormous" investment, say industry sources, although New Delhi will benefit from a Category 3 instrument landing system due to be installed by the end of the year. The airport suffers from fog, mist and pollution, which cause up to 40% of flights to be cancelled.
Source: Flight International
