For take-off, aviation reforms wait for Maharashtra polls

Other proposals have to do with re-capitalisation of Indian Airlines and Air India, seeking formal Cabinet approval for increase in FDI for aviation sector from 40 to 49 per cent — there’s still a no on foreign airlines investing in the sector — and approval for a meeting of the GoM on airport restructuring to okay the list of bidders.

The Ministry also hopes to send the draft civil aviation policy for Cabinet approval by December.

The exact nature of the proposal for private airlines operating abroad will, however, be decided only after Civil Aviation Minister Praful Patel consults Prime Minister Manmohan Singh.

The Ministry is said to be working on a couple of options: opening up international sectors in a selective manner, starting with East Asian countries; the other possibility is to obtain an in-principle approval and gradually open up the sectors.

The second alternative could also be modified to expand the scope of the Group of Ministers, formed for restructuring of Delhi and Mumbai airports, by empowering it to take the decision on selective opening of international routes for private carriers like Jet Airways and Air Sahara.

But sources said that chances of linking this proposal to the civil aviation policy seemed remote, especially with the Cabinet keen that the Ministry move fast on this count. This was made clear during discussions in August when the Cabinet approved the air bilateral agreement with Tunisia.

The other important issue on which the Ministry is expected to move after the Maharashtra polls is re-capitalisation of national carriers Indian Airlines and Air India. While IA has a capital base of some Rs 105 crore, AI’s capital base is around Rs 153 crore.

With such a narrow capital base and the Government unlikely to provide sovreign guarantee each time, sources said that it was difficult for either airline to undertake high-budget activities like fleet expansion or flight infrastructure projects.

Here too, the Ministry is examining different alternatives which include cross-holding by both airlines. But key to the proposal would be a Government yes for infusing cash into the airlines, the amount for which has not been decided and will require Cabinet consent.

The Ministry hopes to finalise the draft civil aviation policy soon and send it for Cabinet approval by December.

The policy would attempt to comprehensively address all issues related to aviation reforms and set the ball rolling for a series of far-reaching measures over the next decade or so.

While inputs are still coming from various quarters, it is the second part of the Naresh Chandra Committee which is still awaited. While this document has already been prepared, sources said, a meeting of the committee members and the Civil Aviation Minister has not materialised due to scheduling problems.

The Ministry has already approved the hike in FDI for the aviation sector from 40 to 49 per cent, which was announced in the Budget. This too is expected to come up for Cabinet approval soon. The Ministry has, however, turned down for the moment the proposal to allow foreign airlines to invest in the sector.

This apart, the Ministry will soon send a proposal for a meeting of the GoM on restructuring of Delhi and Mumbai airports to approve the list of bidders after submission of expression of interest.

At this stage, all 10 bidders are likely to remain and the Ministry has already started work on the document that will make the request for a detailed proposal.

The Indian Airlines’ acquisition plans for 43 aircraft too has got the Ministry nod and discussions are on to fix the date for a meeting of the Public Investment Board after which the proposal will go to the Cabinet for final approval.