Maharaja in chains

The biggest mistake relating to Air India was the decision to merge the erstwhile Indian Airlines into the flagship carrier. In 2007, in its report on the national carriers, Accenture had highlighted two factors as being responsible for their sub-optimal performance: an ageing fleet and the fact that the two existed individually.
The report had gone on to say that merger of the two entities and replacement of the ageing fleet would result in a profit of Rs 1,000 crore in the first year itself. Instead, in the three years following the merger in 2007 we have seen losses escalate from Rs 1,200 crore in the first to Rs 2,600 crore in the second to Rs 5,500 crore in the third. Each time, the management of the airline blamed the losses either on high fuel prices or intense competition or some other factor. The inescapable fact is that the airline today has accumulated losses of Rs 16,000 crore.

A new fleet was indeed acquired for the airline but with almost no planning. When an airline buys expensive aircraft such as the Boeing 777 that Air India acquired, route and fleet planning often starts six months before the aircraft start arriving. Instead, we had an extraordinary situation where Air India could not take delivery of three aircraft that had to remain parked at Boeing's factory for more than three months as Air India did not have enough trained pilots and cabin crew.
Again, when Arvind Jadhav took over as managing director of Air India he quashed the recruitment of additional cabin crew after the process for it had been nearly completed. As a result, another eight months were spent hiring cabin crew. During this period hundreds of flights had to be either cancelled or were delayed, not because of a lack of pilots or planes but because of a lack of crew.
29/05/11 Rajiv Pratap Rudy/Business Today

To Read the News in full at Source, Click the Headline

Categories: Air India May 2011