How A-I went under poverty line
Like every other airline, Air India has been bleeding due to excess capacity, lower yield, a drop in passenger numbers, an increase in fuel prices and the effects of the global slowdown. But experts say the Maharaja’s problems are peculiar and of its own making, reports Lalatendu Mishra.india Updated: Jun 18, 2009 01:47 IST
About 20,000 Air India employees have decided to agitate in protest against the management’s decision to defer salary payment by 15 days, say union leaders.
On June 15, the 77-year-old airline had issued a circular stating the June salary will be paid late due to a financial crunch.
Like every other airline, Air India has been bleeding due to excess capacity, lower yield, a drop in passenger numbers, an increase in fuel prices and the effects of the global slowdown.
But experts say the Maharaja’s problems are peculiar and of its own making.
Its losses have almost doubled to over Rs 4,000 crore in 2008-09 (Rs 2,226 crore in 2007-08) and it does not have the money to foot the Rs 350-crore monthly salary bill of its 31,500 employees.
The airline’s employees say this will be the first time their salaries will be paid so late. They blame the Air India management and the civil aviation ministry for the mess.
“We had opposed the merger (of Air India and Indian Airlines into National Aviation Co of India),” said Dinakar Shetty, president, Air Corporation Employees Union (ACEU), the national carrier’s largest trade union.
“The aviation minister facilitated the merger, saying he is the custodian of the airline. Why did the airline fail? Why has he not resigned?”
Shetty said the union would decide it future course of action after June 30. On June 30, the union plans to organise a nationwide demonstration and resort to ‘no pay, no work’ if employees do not get salaries on time. “We’ve issued a notice to the airline and sought a meeting,” said Shetty.
The Air India spokesperson said, “We have not received any notice.”
Though officers are not allowed to go on strike, Air India’s pilot and engineer associations are holding a separate meeting to decide on the issue.
“The crisis in Air India is getting deeper,” said Kapil Kaul, CEO (South Asia), Centre for Asia Pacific Aviation, a global aviation consultancy. “The pity is it’s asking for a bailout package from the government without admitting the enormity of the crisis.”
Kaul said there was a fundamental flaw in the airline’s business model. “It went on adding too much capacity without thinking about viability,” he said. “Its huge manpower and inadequacy in management never allowed the airline to be competitive.”
Air India is reportedly seeking a bailout package of Rs 14,000 crore — including equity, special grants and soft loan from banks at 5 per cent interest.