Air India is sinking deeper into the red

Mumbai: Air India management and the government have been tinkering around with peripheral issues while the airline sinks deeper into the red by the day.
Having four non-executive directors on the board who will meet briefly about half a dozen times a year will achieve little. It is mere window-dressing. People who have applied for the position of COO may not be able to turn the airline around. Air India urgently needs experienced and reputed turnaround specialists, who will need to have a free hand. However, no one seems to be even looking for them.
The recommended de-merger of Air India and former Indian Airlines will be as difficult as the merger was. Having the two separate airlines under the National Aviation Company of India Ltd (Nacil) will only add more layers of management. The botched merger attempt will haunt Air India for years to come.
Leasing out or selling aircraft will attract few buyers, and only at fire-sale prices. Sale of other assets will also be at low prices, and will bring brief respite.
For reduction of the fleet to reduce gross overcapacity, leased aircraft can only be returned when their leases expire — to avoid penalties. Order cancellations or even deferrals come at a heavy cost. Older owned aircraft can be more easily phased out.
For years after all 111 aircraft have been delivered, Air-India will continue to face a gross excess-capacity situation. It also inherits a multiplicity of aircraft types — Do228s, ATR42s/72s, CRJ700s, A320 family, B737NGs, A310s, B777s, B787s and B747-400s.
It is a logistical nightmare.
03/04/10 Daily News & Analysis

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Categories: NACIL Apr 2010