Wednesday, May 24, 2017

Maharajah of debt: On Air India’s revival

The reputation of India’s national air carrier for making consecutive losses is closely matched, and also linked, to its operational efficiencies. The issue of whether the airline has a future has been frequently posed, but the question has a certain edge after the introduction and growth of private airlines. Minister of State for Civil Aviation Jayant Sinha, however, believes the government can still revive the carrier, and grow it into India’s own “great global airline” to compete with the likes of Emirates and Lufthansa. In an interview to this newspaper, Mr. Sinha added that the government is working on a plan to improve the airline’s financial position, corporate governance, and management. But the main problems that beset Air India are structural, which is why efforts to revive the entity are unlikely to bear fruit. The airline has failed time and again to prove that it can generate sustainable profits. It recorded an operating profit after almost a decade in fiscal 2015-16, thanks mainly to a fall in oil prices, but still ended the year with a net loss. These losses have been mainly owing to a slew of operational inefficiencies, including a bloated workforce. It is doubtful whether these issues can be adequately addressed unless there is a change in ownership. Traditionally, public ownership has left the carrier’s management subservient to the interests of the political class, while taxpayers funding the airline’s operations have been left holding the short end of the stick.
24/05/17 The Hindu

0 Comments: