Over the last year, there has been endless talk about Air India being a white elephant that the Government should either partially privatise or completely sell-off in order to relieve a crushing burden on the taxpayer. The writer believes there is an hitherto neglected dimension of the Maharaja story, which merits investigation.
NDA’s attempt to privatise Air India
In 2001, the Bharatiya Janata Party-led NDA government tried to sell off Air India (international arm) to the TATA Group-Singapore Airlines joint venture. It also received bids from an Air France-Delta Air Lines venture and a last minute bid from the UK-based Hinduja brothers who tied up with Lufthansa. None of these bidders was driven by altruism or fantasy; obviously the airline had huge potential. Luckily, Singapore Airlines backed off, and as the global aviation economy slumped after 9/11, the deal was scrapped.
Profit & (Loss) from 2004 (in Rs Crore)
Indian Airlines 65.61
Indian Airlines 49.50
Indian Airlines (240.29)
2007-2008 NACIL (2226.16)
2008-2009 NACIL (7774.42)
2009-2010 NACIL (5552.44)
Cause of losses
This dropping of routes not only caused the loss of cost-effective destinations, but also led to under-utilisation of planes and pilots. The double disaster of over-purchase of new planes which increased debt, and under-utilisation of profitable routes which decreased revenue, had a cascading effect...
The then minister had little time for the national carrier. He took months to decide issues regarding the national carrier; but in the case of private airlines, he took just days to urge the Airports Authority of India to defer airport charges and PSU oil companies to defer fuel charges.
Road to Recovery
Current industry standards of aircraft efficiency are 16 flying hours/day; Air India’s fleet average is 8-12 hours/day. With 111 new planes in its fleet, it makes sense for Air India to get back priority on lucrative national and international routes.
The good news is that the airline’s operating load factor has gone up 5% from 57% (08-09) to 62% (09-10) and passenger load factor up 6% from 59% (08-09) to 65% (09-10).
While Praful Patel was seen as an unmitigated disaster, his successor Vyalar Ravi made some serious efforts to bring the airline back on track. But the UPA decided to use the civil aviation portfolio as a political tool and gifted it to RLD chief Ajit Singh, in view of the Uttar Pradesh assembly elections. He immediately invoked the mantra of FDI, a concept that was part of the ministry’s five year strategy plan, but was fast losing its sheen in the economy as a whole.
Air India has been the victim of a nexus determined to drive the airline to the ground, to mould public opinion against the airline and in favour of privatisation to corporate raiders from India and abroad. But in this exceedingly complicated world, no country can afford to be without a national carrier, and it is a matter of national pride and honour to restore the denuded glory and prestige of the Maharajah.
Financial reports on the Air India website – www.airindia.in
The author is a student
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