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Time for some plane truths

Air India must shape up or ship out. There’s no point in keeping it on life support indefinitely.

india Updated: Jul 03, 2011 22:18 IST
Hindustan Times

Air India is back in the news again with its familiar story of imminent collapse. The State-owned airline is poised to lose nearly

Rs 8,000-10,0000 crore this year, is paying salaries a couple of months late, is on the verge of defaulting on aircraft loans, and is snowed under Rs 42,570 crore of accumulated debt. A company with Rs 2,145 crore equity has dug itself into a Rs 100,000 crore hole in debts and losses. Does it deserve a lifeline? Astoundingly, the answer is yes if the company is owned by the government and the tab is picked up by the taxpayer. Should the airline's management be allowed to continue? Again astoundingly, yes. Moreover, the managers that brought Air India to such a pass now have the job of turning it around. The government will over the course of July review plans to park two-thirds of the bloated airline's 30,000 workers in ground handling and maintenance subsidiaries, to buy another 100 planes, to pump in Rs 43,255 crore equity, and to pay overdue bills for ferrying ministers and officials.

In the wonderland of State-run enterprise, the taxpayer is bemused. Looks suspiciously like throwing good money after bad. Yet, the bigger fleet and extra cash are needed so that Air India can earn Rs 5,000 crore more and run on Rs 4,000 crore less every year. To do this, the airline must cart 17 million people in 2015. If it manages to accomplish this, it could fly out of the red five years from now. But before the government signs over shiploads of rupees, shouldn't it be asking for some guarantees? This is not the first revival plan the airline has come up with. Air India operates in the real world, not inside central hall of Parliament where you can go round and round in circles and never turn the corner.

Air India can survive if it is run like an airline, not a ministerial fief. The question its owner must ask is how best can this be accomplished, not how to micro manage near-death experiences. If Air India serves the national purpose by expanding its operations in a rapidly growing industry, it has to be as a viable entity. Unless the government acquires extraordinary powers of delegation overnight, the airline is better left to professional managers who are answerable to shareholders. Privatising Air India has, for one reason or the other, been knocked off the government's agenda every time serious thought has gone into it. Even listing the airline with majority government ownership will bring some commercial accountability to its management. There's no point in keeping the Maharaja on life support indefinitely.

ht epaper

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