Air India comes to face with harsh realities

Mumbai/New Delhi: Air India, founded by India’s first pilot JRD Tata, may have ended the pilots’ strike by promising to roll back the cut in incentives, but that may well be another missed opportunity for the state-owned white elephant to remain afloat, after squandering many in the past.
Air India's problems are amplified because of its ownership, which is as much a bane as it is a boon for its staff.
The morale and finances have been declining steadily for more than two decades, which included the sacking of the board once, the wrong choice of aircraft and flying on routes to satisfy the powers that be in New Delhi.
The National Aviation Company of India (Nacil), the combined Air India and Indian Airlines, is seeking Rs 3,000 crore in equity from its lone shareholder, the government, as a last resort. The government had suggested it cut costs, partly bloated by the free or subsidised use of the company’s resources by the owner itself, if it wanted funds. Air India’s apparent first step to cut performance-linked incentive to pilots as part of reducing manpower costs by Rs 700 crore has backfired. Pilots went on strike for four days last week, crippling services and resulting in a loss of revenue, forcing the government to yield to its demands that may well be the end of cost-cutting. It had planned to cut other costs by around Rs 900 crore a year.
05/10/09 Mithun Roy, G Ganapathy Subramaniam & Nirbhay Kumar/Economic Times

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Categories: NACIL Oct 2009