Tata Group will ensure Air India's place in the skies: Jyotiraditya Scindia, Aviation minister

The government transferred Air India to its new owners, the Tata Group, on Thursday, marking the successful completion of the privatisation exercise. Aviation minister Jyotiraditya Scindia told ET in an interview that he would still choose to fly Air India, saying the carrier is not just a company but a feeling enshrined in the hearts of 1.3 billion Indians. Edited excerpts:

Now that the privatisation is complete, will you still have sleepless nights about Air India?
The privatisation process was a collective effort, and I would like to thank the staff members at Air India, the aviation ministry and DIPAM (Department of Investment and Public Asset Management), and congratulate the new owners. I am confident that they (the Tata Group) will take the airline to new heights.


I believe in the strength and story of the civil aviation sector in India. I believe we're a sector that has tremendous potential. We are just about seeing the rise of the democratisation of travel, and UDAN (Ude Desh ka Aam Nagarik, a regional connectivity programme) is a single example of that. You are going to see very healthy growth in the sector, but we need to get rid of Covid first. We saw a return of pre-Covid growth during November and December, but then Omicron came... I am very confident that over the next few weeks, we will re-emerge again.

Earlier attempts to divest Air India failed. How did this succeed?
Under the Prime Minister's vision, his commitment and directive... He was very clear this (public money funding Air India) should stop.

Reduction in VAT on Jet Fuel
An airline losing Rs 20 crore a day when the social sector requires so much funding (was unacceptable).

That gave us the strength to push forward and successfully complete this transaction. That includes the ministerial committee headed by the home minister. It was flexible in approach and consultative, and that led to a successful transaction. I think this becomes, in many ways, the sort of dashboard to look at future transactions as well.

What are your expectations from the Tata Group?
Tata Group, which pretty much gave birth to Air India, will do its utmost to ensure that Air India regains its rightful place, to use an analogy, in the skies - not only domestic but also in the international skies. Together with their HR capabilities, strategic game plan, financial muscle and marketing capabilities, (they) will make a success of this initiative, which JRD Tata himself pioneered.

Reduction in value added tax on jet fuel has been your focus since day one. How much have you achieved, and is there a plan for states with large airports like Delhi and Mumbai?
Prior to my taking over, 12 states and union territories had VAT on ATF (aviation turbine fuel) ranging from 1% to 5% and there were 24 states and UTs that had VAT ranging from 20% to 30%. Now, think of the burden on airline companies, as oil cost is close to 39% of their total cost. We worked assiduously with all states and, I am pleased to inform you that 11 states have reduced their VAT from prohibitive levels of 25-30% down to less than 1-5%. Today, 23 states are below 5% and only 13 states above 15%. So, the matrix has been turned on its head.

There are benefits to states that are lowering tax rates too. You are seeing that Srinagar, one week after J&K reduced VAT rates, has experienced a 360% rise in refuelling from one station alone. Kerala and Andhra Pradesh, when they lowered VAT on ATF, witnessed a 15% increase in flight connections over the next three months. These are economic advantages that start accruing to states. We worked very hard in the last four months to make this happen. And this will be a huge game-changer for the aviation sector. And I am also engaging with other states on the issue.

Aviation and travel were the worst hit due to Covid and are still struggling. What should they expect from the budget?
I have met the finance minister multiple times with several initiatives one can look at... I leave it to the FM's judicious wisdom and decision to make that call. On budget day, both you and I would be waiting to see what is in store for the civil aviation sector.

Would you still choose to fly Air India?
You bet, you bet! See, what you need to understand is that Air India is not a company... It is a feeling that is enshrined and carved and etched in your heart, my heart and in the hearts of 130 crore Indians.