Loss-making government carrier Air India should be partly privatised, as private investors would focus on maximising profit and, in turn, solve the carrier's operational issues, a study commissioned by the corporate affairs ministry has said.
“Bringing in private players and capital to operate India's national carrier will help address some of the airline's operational issues, while freeing government funds for other purposes.”
“Partially privatising Air India would create incentives for the carrier to compete with other airlines, since Air India's private investors would seek to maximise return on their investment,” said the study report on ‘Competitive framework of civil aviation sector’, from the Indian Institute of Corporate Affairs (IICA).
However, Civil Aviation Minister Ajit Singh recently ruled out any move to privatise Air India, as the government was pumping in Rs 30,000 for its restructuring.
IICA had nominated Nathan India as consultants to carry out an analysis on competition-related issues in the civil aviation sector.
The report pointed out that the Air Corporation Act 1953 provided a legislative framework within which the government could provide funds for capital expenditures, as well as potential bailout funds for the carrier.
However, “this regulation gives Air India an unfair competitive advantage, by creating a framework through which it may apply for government financial assistance. The Act lacks competitive neutrality with regard to airlines in terms of access to government funds for capital expenditures and potential bailout,” it said.