Sunday, June 04, 2017

More turbulence ahead for loss-making Air India

The Indian government is moving towards a decision on whether to sell off its loss-making national carrier Air India, as calls for privatisation gather pace.

The ministry of civil aviation is working on a plan of action, with privatisation among the options it is considering. India’s finance minister, Arun Jaitley, recently spoke about the possibility of disinvestment, or a strategic stake sale.

As it stands, the state-owned Indian carrier, which has bloated staff numbers and huge debts, guzzles hundreds of millions of dollars of taxpayers’ money each year.

The airline – sometimes referred to as "the maharaja" in India because of its mascot – is burdened by debts amounting to about 500 billion rupees (Dh28.52bn).

Air India reported a loss of more than 35bn rupees in the financial year to the end of March 2016.

"Air India is in a debt trap," says Satish Modh, who has worked in the aviation sector for 28 years and was part of a turnaround plan for Air India before becoming the director of the VES Institute of Management Studies and Research in Mumbai. "The airline faces the issues of leadership, accountability and lack of freedom in decisionmaking at the top level. In this situation will disinvestment help? Who will invest in the airline?"

The airline needs to be completely severed from the government and therefore privatisation is the best option, he says. This view is widespread among many experts.

The aviation market in India is a cut-throat environment, with several airlines competing for business and with operating costs being high.
04/06/17 Rebecca Bundhun/The National

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