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Air-India hunts for overseas ally

Sandesh Prabhudesai in Panaji

India's civil aviation ministry has decided to go in for foreign equity participation to run Air-India more efficiently.

Civil Aviation Minister Sharad Yadav, who was in Goa to attend a meet on civil aviation, said that the government is trying to get a foreign partner for Air-India. He emphasised that the government, however, will maintain control over the airline.

"It is the most prestigious corporation of the government and we cannot compromise with the national interest while doing this," Yadav affirmed. He also ruled out a similar kind of foreign equity participation in the domestic carrier.

He said that the Disinvestment Commission has suggested that equity participation in Air-India be increased from Rs 1.53 billion to Rs 10 billion. As such, Yadav said, there is no option but to go in going for foreign equity participation in the airline. He, however, declined to spell out the amount of private equity participation.

In order to prop up the airline, Yadav said the cabinet has already approved a voluntary retirement scheme, or VRS, for Air-India's 17,500-strong workforce. This would be applicable to all, except licensed pilots and engineers.

He is hopeful that at least 1,000 employees would opt for it. He also said that fresh recruitment would be restricted in the future.

He said that the huge workforce was the prime reason for the present condition of Air-India. The wage burden of the airline has increased from Rs 2.56 billion in 1989-90 to Rs 11.65 billion in 1999-2000, he informed.

Air-India's flight-employee ratio has also gone up to 1:700 against the international ratio of 1:250, he added.

He asserted that Air-India would be made a profit-making venture once again, even as he provided figures of the annual loss the airline has been making.

"The losses are becoming more managable," he said. He said that from Rs 2.97 billion in 1996-97, the loss would drop to around Rs 1.70 billion in 1999-2000.

While the loss till December 1999 amounted to Rs 710 million, he said that at least Rs 900 million more would be added to it by the year end.

Rationalisation of the airline's routes and freight structure to improve its performance was also discussed at the meeting, the minister informed.

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