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Time for govt to let bleeding Air India go?

india Updated: May 12, 2012 02:19 IST
Tushar Srivastava
Tushar Srivastava

They are at it again. Steeped in losses and surviving on taxpayer’s money, Air India (AI) pilots have struck work yet again. This is the sixth strike in AI since 2009 and the fourth by pilots — its highest-paid employees with many earning around Rs 12 lakh a month — in less than a year.

The national carrier is in a constant state of paralysis as pilots demand the moon, disrupting flights. “If it surprisingly flew that’s the breaking news,” as a wag wrily commented on Twitter recently.

For policymakers and the government, the challenge is to revive the airline, committed to buy state-of-the-art Boeing 787 Dreamliners in an ambitious (read unrealistic) expansion plan, even as private budget carriers hammer it down. http://www.hindustantimes.com/Images/Popup/2012/5/12_05_biz3.jpg

Last May, the carrier lost Rs 200 crore when pilots struck work. The latest agitation has led to a daily loss of around Rs 10-15 crore in addition to the existing Rs 21 crore of operating losses.

AI made a record loss of Rs 7,853 crore in 2011-12. It has over Rs 70,000 crore in outstanding loans and dues but employees don’t seem to be bothered. And why would they be? After all, the government only last month cleared a Rs 30,000 crore helpline from taxpayers’ hard-earned money to keep the airline alive. “Pumping money into AI is throwing good money after bad. That’s not how you run an airline,” said Saj Ahmad, a London-based aviation analyst. Or any business, for that matter.

The world over, national carriers have seen smooth transition into corporate hands, but AI has been a comatose patient for years now.

“AI is living in the past and needs to wake up to 21st century realities,” said Ahmad. “Flag carrier status is meaningless without profitability.” There is no flag carrier in the UK or the US, and even China has a slew or airlines that fly the flag now behind Air China. British Airways, Lufthansa and Qantas are among the best examples of government-owned airlines turning private, and making profits.

AI’s problems are legend, and the management’s target of turning profitable by 2018 appears a cruel joke. The airline has too many employees, not enough routes, is poorly managed and is strangled by apathy and governmental red tape and bureaucracy - apart from its own employee apathy. To add to this all this, is the ill-conceived merger of AI and Indian Airlines.

“The merger was the biggest mistake. The people who initiated the merger and killed the airline should be held accountable,” said aviation expert Captain Mohan Ranganathan. “If they could not integrate AI and IA in five years, the fault is with the government and the airline management. AI was systematically allowed to degenerate, probably to help private operators.”

If profitability is a yardstick, some of the most profitable airlines across the globe today are national carriers, be it Singapore Airlines, Air China, Etihad Airways, Qatar Airways or Emirates. However, what differentiates them from AI is that they are government-owned but professionally-managed.

“Privatising AI would only work if the sell off meant no government hand whatsoever. New blood should be allowed to do what they need to in order to turn red ink into black. Without that, this is a state-funded patient that will stay in a constant state of paralysis,” Ahmad said.

“The present strike is irresponsible. Pilots are talking of career of their members being affected. Cancellation of AI Express flights may have jeopardised the career of several hundred poor workers from Kerala who were to travel to the Gulf. The government should take a very strong action and put an end to this constant threats of strikes,” said Ranganathan.

A wholesale management change, divestiture of poor performing routes, selling off older airplanes, new and cheaper labour as well as a sell off where the government has no control are some of the steps that might help bring the airline back on its feet.