'Fund infusion in AI must to keep fares in check'

Reflecting concerns of members, Finance Minister P Chidambaram said on Friday in the Lok Sabha he was not happy with implementation of Air India's turnaround plan, but is injecting Rs 2,000 crore (Rs 20 billion) to keep the national carrier afloat to check any spurt in fares.

"As far as AI is concerned there is a turnaround plan.

I am not happy with the way the plan has been implemented in the past. There has been several setbacks. But what do we do with AI?

"If I do not provide this Rs 2,000 crore (Rs 20 billion) there will be greater difficulty," he said winding up a discussion on the supplementary demands for grants.

Of the additional expenditure Rs 32,120 crore (Rs 321.2 billion) under the first batch of supplementary, Rs 2,000 crore (Rs 20 billion) has been earmarked for equity infusion in Air India as part of the turnaround plan and restructuring package.

"If AI is not kept afloat, what will happen

is airfares will go up, other airline companies will simply push up their air fares because so many seats will not be available.

"Which is why we are providing Rs 2,000 crore (Rs 20 billion) to AI," Chidambaram said.

The minister said there were some indications of an uptick in Air India in the last quarter and hoped that AI employees and management will also assist in turning it around.

The national carrier's losses have been mounting from Rs 5,548.26 crore (Rs 55.48 billion) in 2008-09, Rs 5,552.44 crore (Rs 55.52 billion) in 2009-10, Rs 6,865.17 crore (Rs 68.65 billion) in 2010-11 to Rs 7,853 crore (Rs 78.53 billion) in 2011-12.

"There are airlines in the country and around the world running in profit and there is no reason why AI should not be turned around," Chidambaram said.

His response came after members from parties like Biju Janata Dal, Trinamool Congress questioned the government's move to infuse more funds when there was no proper plan for the turnaround of the national carrier.