Air India troubles: Adding surplus to surplus

In August, 2004, the aviation ministry asked both Indian and Airlines and Air India to rework their aircraft acquisition plans. Indian Airlines,
which had already got pre-public investment board (PIB) clearance for buying 43 aircraft, did not change its order.
Air India, on the other hand, increased its earlier order for 24 aircraft to a whopping 68. "Thus an airline with a turnover of Rs 7,000 crore had placed order of planes worth Rs 35,000 crore," sources pointed out.
In all, orders for 111 new aircraft from Boeing and Airbus worth $11 billion were placed. Interestingly, two years back, the then AI CMD V Thulasidas had set up a panel to examine the requirement of aircraft beyond the 111 already ordered. Fortunately for AI, this move remained a non-starter. So far, 49 planes worth $4 billion have already joined the fleet.
The airlines is consistently left with a surplus. That's big money spent on assets that have to idle or be under-utilised.
This splurge on buying aircraft which can't be put to full productive use but entail massive financing costs is one of the key reasons why AI has been heavily bleeding in the last few years
16/07/09 Saurabh Sinha & Manju V/Times of India

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Categories: NACIL Jul 2009