Ministries told to clear Air India dues, make cash payments for tickets

The government on Wednesday asked ministries and departments to clear dues of debt-laden Air India immediately and henceforth purchase tickets only in cash.

The government earlier this month decided to sell Air India to Talace Pvt Ltd, a unit of the holding company of salt-to-software conglomerate Tata group, for Rs 18,000 crore.

The Department of Expenditure, under the Finance Ministry, in a 2009 order, had said that in cases of air travel (both domestic and international), including LTC where the Government of India bears the cost of air passage, the officials may travel only by Air India.

The Expenditure Department said the process of disinvestment of Air India and Air India Express is ongoing, and the airline has stopped extending credit facilities on account of air tickets.

"Therefore, all Ministries/Departments are directed to clear Air India dues immediately.

"Air tickets from Air India may be purchased in cash till further instructions," the department said in an office memorandum.

It also directed the ministries/departments to alert its subordinate offices/institutes under its administrative control for compliance to this office order.

On October 25, the government signed the share purchase agreement with Tata Sons for the sale of national carrier Air India.

Tatas will now seek various regulatory clearances before the handover of the airline by December end.

The deal involves a 2,700 crore cash payment and takeover of the airline's Rs 15,300 crore debt.

The government is divesting its 100 per cent ownership of Air India and Air India Express along with its 50 per cent stake in ground-handling company AISATS.

Tatas beat the Rs 15,100-crore offer by a consortium led by SpiceJet promoter Ajay Singh and the reserve price of Rs 12,906 crore set by the government for the sale of its 100 per cent stake in the loss-making carrier.

As of August 31, Air India had a total debt of Rs 61,562 crore.

And 75 per cent of this debt or Rs 46,262 crore will be transferred to a special purpose vehicle AIAHL before handing over the loss-making airline to the Tata Group.

Photograph: Amit Dave/Reuters