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Time to pull plug on AI?

In the 100th year of India's civil aviation history, when the first air flight between Karachi and Delhi was started by the Indian State Air Services in 1912, the national carrier Air India (AI) is all but grounded. Tushar Srivastava reports. Graphics: Trouble in the air

india Updated: Apr 30, 2011 02:16 IST
Tushar Srivastava

In the 100th year of India's civil aviation history, when the first air flight between Karachi and Delhi was started by the Indian State Air Services in 1912, the national carrier Air India (AI) is all but grounded.

A year that should have seen firecrackers and celebrations is, instead, passing through serial fiascos, with the airline staring at the possibility of a lock-out —it’s third — after 1971 and 1973.

Last year, Rs 2,000 crore of the taxpayer’s money has been handed over to the AI management to keep its planes in the air.

With the airline posting record losses of Rs 8,500 crore (according to the Comptroller and Auditor General) in 2010, the clamour for its privatisation has grown louder.http://www.hindustantimes.com/Images/HTEditImages/Images/30_04_pg01a.jpg

Despite having the largest fleet of 165 aircraft, AI is struggling to hold on to its depleting market share. In January, it slipped to the fourth position with 15% of the market share.

According to a turnaround plan, vetted and modified by consultancy firm Deloitte Touche Tohmatsu (India) in February, it was projected that AI would need an equity infusion of around Rs 17,500 crore to come out of the current mess.

“To keep running the airline at the cost of the taxpayer’s money is ridiculous,” said Sanat Kaul, former aviation secretary.

“It’s hard to believe that the same airline had posted a profit of over Rs 75 crore in 2005-06,” said a top AI official.
“The only solution to this never ending problem is to privatise the airline,” said a former civil aviation minister, who did not wish to be named.

Efforts were made to this effect in 2002 and 2004, but the move was scuttled at one level or the other. “Other airlines need ‘load factor’ to survive, but AI has the ‘dole factor’ to survive,” said aviation expert captain Mohan Ranganathan, who is also member of a government committee on air safety.

In its report last year, consulting firm Booz and Co stated that the airline was slipping into a “slow and silent decline” and unless drastic steps were taken the airline would slide into a “point of no return”.

In a sign of the rampant mismanagement, the company said that it had no money to pay salaries beyond March. Yet, it had hired three top executives at an annual salary of Rs 6 crore a year, all of them ironically to turn the company around. Two had to resign and one sacked in February for failing to do his job.

And now, the third pilots’ strike in the company in as many years is bringing the airline to a new low.