Despite cut in budgetary support, Air India can lap up space ceded by Jet Airways

Finance Minister Nirmala Sitharaman's Budget for FY19-20 has drastically cut support for Air India (AI) to Rs 434 crore.

A report in Business Standard noted that this is the lowest in years, given that the NDA government invested Rs 24,306 crore in the national carrier from FY14-15 till FY18-19.

As per the Budget documents, the Centre gave the national carrier Rs 6,427 crore in FY17-18, the highest direct infusion. In FY18-19, Rs 7,000 crore was allocated to an incorporated special purpose vehicle (SPV) - Air India Asset Holding Company - for servicing loans.

The paper found that while Air India showed operational improvement in FY17-18 compared to FY14-15, the financial losses continued to be within the Rs 5,000 crore range for the main service and Rs 260 crore for sister service Alliance Air. Air India Express, which runs the Gulf route was the lone profit maker, from FY14-15 on to FY17-18, showing Rs 260 crore in the green, it added.

Thus, the allocation cut is being seen as an indication of the government’s seriousness in selling the national carrier by the October deadline.

The paper further noted that the Jet Airways crash could also improve Air India's prospects as the latter is in the best position to take up Jet's passenger load, especially along the international routes.