Air India's Maharaja dethroned?

The civil aviation minister Ajit Singh’s reported remarks favouring privatisation of Air India have rekindled an old debate in the country’s public policy discourse: is it time to pull the plug on the national carrier? A few facts are in order. Last year, the government announced a Rs. 30,000 crore cash-booster, infused over an eight-year period.

The condition: the national carrier has to turn profitable by 2018. With 32,000 employees and accumulated losses totalling more than Rs. 30,000 crore, the Maharaja needs a lot of soul-searching. Despite some signs of better performance in recent times, the airline continues to bleed on all fronts: from aircraft leasing costs to staff-to-aircraft ratio. Nimble private airlines have eroded the former monopoly’s market share, which now stands at about 19%, down from 50% in 2003.

It is in everybody’s interest that a clear revival plan emerges from among the medley of opinions. But, at the same time, one also can’t help wondering whether it wouldn’t be more appropriate to rescue Air India from a taxpayer bailout, rather than perpetually digging deep into the exchequer’s pockets for staying afloat. The grim reality that Air India needs immediate surgery is not lost on either side of the aisle.

It is about time for Air India and its owners to shift the focus to ‘load factor’ to survive, rather than on the ‘dole factor.’ The bemused taxpayer is entirely justified in asking whether a company that has dug itself into a Rs. 73,000-crore hole in debts and losses deserves a lifeline forever.

By standard measures, the airline had a miserable performance in 2012-13. Only 14 out of the total 201 services that AI operated managed to meet the total cost of operations. Yet this marked a vast improvement over previous years.

For the first time since the merger of Indian Airlines and Air India in 2007, its EBIDTA (earnings before interest, depreciation, taxes and amortisation) turned positive showing that there could be light at the end of the tunnel. The national carrier can survive if it is run like an airline, not a State-owned fief. Unless the government exercises extraordinary powers of delegation overnight, the airline is best left to professional managers who are answerable to shareholders.

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