The new civil aviation policy to be announced soon is expected to radically change the existing norms. If deregulation is the trend in all sectors in India, aviation is fast with disinvestment along with deregulation. The government has already decided to dilute its stake in Indian Airlines and give the management to a strategic partner.
The new policy is expected to allow domestic airlines to fly on international routes and privatize most aviation infrastructure like ground handling, training and aviation support services. To encourage aircraft manufacturing in the country the government may allow 100 per cent foreign equity in aircraft manufacturing. There are plans for a new aviation regulatory body to replace DGCA (Director General Civil Aviation) on a model based on British CAA. The new regulator with statutory autonomy is expected to be a watch dog and a facilitator.
Next important development is the decision to dilute government stake in all aviation companies except Airport Authority Of India. The government is planing to become minority share holders in Air-India the international airline, Indian Airlines the domestic airline and Pawan Hans which hire and operate helicopters.
First step has already been taken with the Government decision to sell its majority stake in Indian Airlines (IA), the company which was a monopoly till a few years ago in the domestic aviation sector. The Cabinet Committee on Disinvestment (CCD) has decided to offload 51 per cent in Indian Airlines. Out of this 26 per cent stake will be given to a strategic partner and the remaining 25 per cent will be shared by financial institutions (FIs), employees and the public. The strategic partner will be decided through a bidding process.
The strategic partner with 26 percent stake will be given a free hand in running the airline under the supervision of a board, which will be clearly defined in the shareholder agreement keeping in view national security and possible emergency requirements. The agreement will be finalized and approved by the Government before financial bids are invited from the prospective partners. There are however issues which will keep many potential parties especially foreign airlines away. Those bidding for the 26 per cent stake cannot have more than 40 per cent foreign equity because of the stipulations in the present domestic air transport policy and foreign airlines cannot be a joint venture strategic partner to pick up the 26 per cent stake as per the present law.
An inter-ministerial group (IMG) will decide how the 25 per cent stake should be split between FIs, IA employees and the general public. The group will select a suitable global advisor to help in market analysis, preparation of documents and advise the Government on the specific steps to be taken for implementing the disinvestment. The Inter Ministerial Group will consist of representatives of the divestment department, the civil aviation ministry, department of public enterprises, department of economic affairs of the finance ministry and IA.
No comments:
Post a Comment