August 14, 2017 TnH Global

Keep profitable Air India subsidiaries out of disinvestment says Nitin Gadkari

The announcement of the induction of SpiceJet’s Boeing737 for “C checks” at the maintenance, repair and overhaul (MRO) facility was made here in the presence of Civil Aviation Minister Ashok Gajapathi Raju, Gadkari and Maharashtra Chief Minister Devendra Fadnavis.

As Air India Engineering Services Limited (AIESL) announced induction of first third-party aircraft for major maintenance work at its Nagpur MRO unit, Union Minister Nitin Gadkari said profit-making subsidiaries of Air India should be kept out of proposed privatisation.

Air India Chairman and Managing Director, Ashwani Lohani and SpiceJet chairman, Ajay Singh were also present. Gadkari, the Minister for Road Transport, Highways and Shipping, is part of the five-member ministerial panel, headed by Finance Minister Arun Jaitley, tasked with deciding on the process of privatising Air India.

“I would urge the aviation minister that the subsidiary running the MRO is kept different from its parent, because if a decision on Air India (stake sale) is taken, I hope this company also doesn’t go to some other party. Any business that is profitable should be encouraged by the government,” Gadkari said.

On June 28, the Cabinet Committee on Economic Affairs gave in-principle approval for considering strategic disinvestment of Air India and five of its subsidiaries. Gadkari also urged SpiceJet to launch services from Nagpur to destinations such as Bengaluru, Chennai, Hyderabad, Kolkata and Delhi, saying there is a huge untapped traffic potential from the city.

Responding to Gadkari’s remarks, Raju said that any suggestions on Air India were welcome, and if they had come from a colleague (Gadkari), they had to be taken “seriously”. “But we all need to work together,” he added. Later, when asked about Gadkari’s views, Raju said, “The discussion on Air India’s divestment is an ongoing process and his comments are welcome.”

This is the first major maintenance work to be carried out for any external party at the Nagpur MRO facility, which will be completed in six days. “Once the capacity at the Nagpur MRO facility is fully utilised, it will create thousands of jobs,” Raju said, expressing hope that foreign airlines will also avail of the MRO services here.

SpiceJet chairman Ajay Singh said the airline is planning to make Nagpur one of its hubs for operations, and launch air services from the city. Built over 50 acres of land in MIHAN special economic zone, the MRO unit was set up as a joint initiative between the Air India and the US aircraft maker, The Boeing Company, in 2010.

Besides maintaining Air India’s Boeing aircraft fleet, it has the mandate to carry out third-party works too. AIESL is working aggressively to expand its foot print in the high-growth potential MRO segment as most of the private airlines carry out these works overseas. So far, Air India and Boeing have invested around USD 116 million in the Nagpur facility. Of this, about USD 107 million has been invested by Boeing alone.

AIESL had signed an agreement with the SpiceJet for C1, C2 and higher checks to be carried out on latter’s Boeing 737 -800/900 aircraft in September last year. The contract is worth USD 6 lakh per year and is valid for three years with assured 100 days of work each year.