Losing Air

Take one, add eleven zeros, and place a rupee sign before them. That is the subsidy Air India is seeking from the government — almost a hundred rupees from every Indian, rich and poor, young and old. There is no talk about it being an essential service; it wants the money simply because it has made a loss. The loss was only Rs 5,000 crore. But Air India is preparing to run a similar loss this year. And that is an underestimate; one can be sure that it will be back asking for more by the end of the year. For Air India has run out of cash; it has an overdraft close to Rs 15,000 crore. Banks refused to let Air India run up a bigger overdraft; so Air India ran over to the government and asked the ever-doting mother to bail it out.
Praful Patel, being the tough minister that he is, has asked Air India to shape up in two years. But at the same time, he has been meeting the prime minister for a loan to Air India. Three years ago, when the market was at its peak, Air India went and ordered squadrons of planes. Its passenger load has fallen since then; it could do today with half the planes it has got. But it wants to buy those brand new Boeings anyway. How does this champion loss-maker justify buying new planes when it has too many already? It says they are necessary to match the planes of its competitors — that passengers would abandon it in even bigger droves if it did not have the latest planes. And it is not being unreasonable; it is not proposing to reduce its capacity utilization from 40 per cent to 20 per cent. It will sell off its old planes, at fire-sale prices. So Air India is adding a new business to flying passengers at a loss — the business of buying and selling planes at a loss.
This is not simply the waste of the country’s resources; it is also just the way of making the entire airline industry sick.
28/07/09 The Telegraph

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Categories: NACIL Jul 2009