New Delhi: Paving the way for the public sector carriers to modernise their fleet in the face of severe competition in domestic and international sectors, the government tonight (April 15) took Indian Airlines (IA) and Air India (AI) off the list of PSUs (Public Sector Undertakings) that are to be privatised.

The move would enable the two airlines to go ahead with their fleet expansion and modernisation plans, which are already in the final stages.

The Cabinet Committee on Disinvestment (CCD), chaired by Prime Minister Atal Behari Vajpayee, approved the proposal of the Civil Aviation Ministry to remove IA and AI from the disinvestment roster, Civil Aviation Minister Shahnawaz Hussain told reporters after the CCD meeting.

When contacted, Hussain, while expressing happiness at the decision, said if the two public sector carriers were to survive the heightened competition, they should be allowed to go ahead with their fleet expansion plans, which would now be possible.

He said privatisation of the two carriers was not feasible at the present juncture as world airlines and the aviation industry at large were on a downswing. "No major airline or aviation company is at present willing or in a position to invest," Hussain added.

In order to give a thrust to the process of aircraft acquisition, a meeting of pre- Public Investment Board (PIB) is likely to take place next week, sources said.

The Cabinet panel had in the year 2000 decided to divest government stake in the two airlines, but the Disinvestment Ministry could not complete the process as the qualified bidders, including Tatas and Singapore Airlines, withdrew in the final stages due to various factors.

While the IA Board has recommended purchase of 43 Airbus aircraft over a five-year period between 2003-08 at a cost of Rs 10,089 crore, AI plans to acquire 17 long haul aircraft costing over Rs 13,000 crore including 10 on firm basis and the rest on option.

Ministry sources pointed out that most of the IA aircraft were about two decades old. The last decision to acquire planes for the domestic carrier was taken in 1986 and 1989 and they were inducted between 1989 and 1994.

Besides 30 A-320s inducted in this period, IA's ageing fleet also comprises five A- 300s (over 20 years old) and 11 Boeing-737s (21 years), which were transferred to its subsidiary Alliance Air on lease.

On the other hand, the private carriers - Jet Airways and Air Sahara- had expanded rapidly in the past few years and now possessed technologically advanced and a younger fleet of planes. While Jet Airways inducted 40 aircraft between 1994 and 2002, Air Sahara got 10 modern planes in the same period.

Air India's fleet comprises four 747-200s (22.5 years), three A-300 B4s (19.7 years), eight A-310s (14.9) and six 747-400s (7.5) and its international traffic share has declined from 33 per cent to 20 per cent in 2001, primarily due to the decline in fleet capacity.

The sources said governments in several developed countries like the United States, France, Greece and Portugal had pumped in additional capital, granted financial relief and extended loan guarantees to their national carriers to keep them afloat.

PTI