The Planning Commission has identified the divestment of government equity in Air-India and Indian Airlines and allowing foreign equity in foreign and domestic airlines as the major issues to be considered in its mid-term appraisal of the Tenth Five-Year Plan.
The proposal to hike the foreign direct investment limit in private carriers from 40 per cent to 49 per cent has already kicked up a controversy, with the finance ministry, the civil aviation ministry and the Left at loggerheads on the issue.
The proposals form a part of the Planning Commission's background note for the first meeting of the consultative group on the transport sector.
While the finance ministry was earlier toying with the idea of allowing foreign airlines to pick up stakes in Indian ones, the civil aviation ministry and the Left parties were against the move. The Union Cabinet is expected to take up the issue shortly.
The Planning Commission has proposed a discussion on the sale of the government's stake in Indian Airlines and Air-India, which had met with opposition from various quarters during the previous National Democratic Alliance regime.
Private players, which had earlier shown interest in the government's stake in the two carriers, withdrew from the race following heavy losses in the aftermath of the terrorist attacks on the US. Some players also opted out, citing inordinate delays in the process.
The Plan panel favours increasing private participation in aviation infrastructure facilities and has said their role in air services needs to be considered.
At present, these facilities are mainly provided by the Airports Authority of India and India Tourism Development Corporation.
Other issues identified by the Planning Commission include speeding up the process of long-term lease of the four metro airports.
Giving a snapshot of the performance of the sector, the note said the expenditure of both Air-India and Indian Airlines was expected to be 13 per cent lower than the allocation during 2002-03 to 2004-05.
While Air-India is expected to spend Rs 1,694 crore (Rs 16.94 billion) between 2002-03 and 2004-05 against the approved outlay of Rs 1,930 crore (Rs 19.3 billion), Indian Airlines' anticipated expenditure is estimated at Rs 893 crore (Rs 8.93 billion) compared with the outlay of Rs 1,016 crore (Rs 10.16 billion).
The proportion of occupied seats to the capacity or the load factor for Air-India is expected to be short of the Tenth Plan target of 67 per cent.
The load factor has, in fact, decreased consistently. After touching a high of 64.6 per cent during 2002-03, it fell to 61.2 per cent in 2003-04 and is expected to decrease to 61.1 per cent this year.
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