Doha
Air India is likely to seek assurances from the new Indian government, led by Prime Minister Narendra Modi, over its restructuring plan, following comments from its Chairman on Monday.
Air India’s financial restructuring plan was approved two years ago by erstwhile Indian Prime Minister Manmohan Singh’s cabinet. However, last month Modi’s Bharatiya Janata Party won an overwhelming majority to lead the country.
The Bharatiya Janata Party reserves the right to review the deal.
Rohit Nandan, Chairman of Air India, said in Doha on Monday that he would like “like a firm commitment that [the restructuring plan] will be continued.”
Nandan was speaking to reporters on the sidelines of the International Air Transport Association (IATA) annual meet in Doha.
Under the turnaround strategy, Air India will receive Rs400 billion (Dh24.84 billion) cash injection from the government over the next 10 years.
Nandan said he expects the new government to move to reduce the operational costs that he said are overbearing on the sector.
“We are certainly hopeful things will be far more decisive now with the new government in place,” he said.
Air India has long suffered from government meddling and mismanagement that has resulted in mounting financial losses. The airline is looking to turnaround its performance with fleet orders and launching new routes such as Rome and Moscow. It is also bidding to join the Star Alliance.
Nandan said the airline’s performance has been “significantly better” over the last two years and is confident the new government will continue to fund it as per the financial restructuring plan that is in place.
India’s aviation industry has long battled with government red tape when it came to developing and investing in the sector. Under the previous Congress-led government, some red tape was removed that opened the door for foreign investment in Indian carriers. Abu Dhabi’s Etihad Airways has since taken a 24 per cent stake in Air India rival, Jet Airways.
