Airliners-India

karatecatman

ECONOMIC TIMES
Two crucial meets to decide fate of AI, airlines
TNN
6 November 2009

NEW DELHI: Next week could be a crucial one for airlines in India with government holding two meetings. While the committee of secretaries headed by cabinet secretary K M Chandrasekhar will discuss the long-pending issue of allowing foreign airlines to invest in desi ones, Pranab Mukherjee-headed Group of Ministers will meet to look into aviation ministry's request to infuse funds into AI.

Many Indian carriers, led by Vijay Mallya's Kingfisher, have long been demanding that foreign airlines be allowed to invest in fund-starved Indian airlines.

Apart from funding, they have pointed out, the foreign partners would also get in their expertise for running airline business.

The government has so far not taken a final call as another section of airlines, headed by Naresh Goyal's Jet, has been opposing this on the ground that in the current environment no player can expect a good valuation. Now after a gap of many months, and for the first time in UPA-II, the issue of FDI by foreign airlines in domestic carriers is being considered again.

However, the trickiest of all seems to be the question of funding AI and saving it from a collapse. The GoM will meet next Thursday and the management faces the challenge of striking some wage cut agreement with unions before that as in the last meeting it was made clear to the aviation ministry that there can be no funding without "matching sacrifice" from AI.

"Some dues of pilots will be paid before November 10. Then we will hold talks to cut salaries. Failing this, we may have to issue an executive order cutting salaries as has been done by many other companies and airlines," said a senior official. Unless a wage cut agreement is thrashed out, chances of AI getting any funds are very slim. "Next week may well decide if AI sinks or swims," said a senior official.
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