New Delhi/Mumbai, July 9: Days after reports cited that Union Aviation Ministry mulling 100 percent foreign direct investment in the cash-crunched Air India, an impact analysis of the closure of Jet Airways has been called by the ministry. Ernst & Young (EY) has been tasked with assessing the chances of success in the light of shutdown of Jet Airways, which closed down as they were unable to clear due of upto Rs 25,000 crores.
Considering the case of debt-ridden Jet Airways, the Union Civil Aviation Ministry is looking at the prospects, that though the private aviation carrier was financially in far better shape than Air India is today, how could it not been retrieved. While on the other side, the Air India's dues are staggering at Rs 58,351 crore and it has mentioned that the airliner is unable to pay the salary of employees timely. Air India Crisis Deepens, Modi Government Mulls Privatisation For Debt-Ridden Airline
It is to be known that the Union government has transferred an amount of Rs 29,464 crore to a Special Purpose Vehicle (SPV) - also known as special purpose entity (SPE) - to lower the AI's debt. In the Budget speech for 2019-20, Union Finance Minister Nirmala Sitharaman said the BJP government is committed to selling Air India.
However, with the investors not satisfied, the government is mulling sell 100 percent rather than 76 percent but Air India’s large and expensive workforce. Currently, AI enjoys the biggest share of the international traffic out of India of 13.5 percent and commanded a local share of 15 percent. Also, it has 27,000 employees at the end of December 2017. On the contrary, Jet Airways had just 16,000 employees, with around 120 aircraft.
The market share for AI has considerably decreased since last year. According to reports, published by The Financial Express, Air India’s domestic market share has been consistently falling and plummeted to 11.8% in September last year, while the international traffic share declined to 10.4% in 2017-18. After the closure of Jet Airways, AI won bilateral flying rights with five countries — Dubai, Hong Kong, Qatar, Singapore and the UK.