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Full financial autonomy for A-I recommended

Subhomoy Bhatacharjee & Puja Mehra

The parliamentary committee on public undertakings has recommended 'full financial autonomy' for Air-India and filling up of its board with government, functional and non-official directors even as it dismissed the government's impending divestment as the reason for not filling up the board.

According to the committee, a complete board with 50 per cent comprising functional directors will ensure that the strategic partner offered a better price for the government stake in the national carrier.

It has also suggested doing away with the current practice of seeking approvals for investments over Rs 500 million from the ministry of civil aviation, the Planning Commission, the finance ministry, the PMO, cabinet secretaries and the cabinet committee.

The vacant posts on the board, the committee pointed out, have remained so since the last two years.

"The current managing director is the only person who is professionally conversant with the airlines business in the current board which consists of four government directors and one professional manager," the committee said adding that the current composition of the board is not in accordance with the guidelines issued by the department of enterprise in March 1992.

The committee has also noted that the question of acquisition of aircraft has been hanging fire for over a decade and Air-India has suffered huge losses due to the complicated procedure.

"The matter of simplification of aircraft acquisition by airline companies should be redressed at the highest level immediately," it said.

The committee also noted that the average daily utilisation of the aircraft in Air-India has not been satisfactory when compared to the best airlines in the world which post higher daily utilisation. It said that the issue of dry-lease of aircraft by Air-India should also be quickly finalised to make use of its unutilised traffic rights.

It also asked for expediting submission of the report of a committee of experts set up in 1997 under Vijay Kelkar to undertake a comprehensive examination of the reasons for losses incurred by Air-India and suggest both long-term and short-term strategies to turnaround the company. "The committee should preferably submit the report before the end of the current financial year," it said.

It also recommended that a thorough enquiry be conducted into the appointment of general sales agent (GSA) in London, which had excluded several other potential bidders.

It also said that the government should explore the possibility of appointing GSAs through the process of auction or by invitation of tenders.

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