Why hopes of turnaround for Air India are almost over

Air India operations yet to be normalised after pilots end 10 day strike.
For nearly sixty years since it took to the skies as government property, it has been hung out to dry, or as some would say these days, given India's fiercely competitive aviation market, hung out to die.
Thanks to a 10-day pilot strike that ended on Friday and hurled Air India into another crisis-daily losses of Rs 15 crore since April 27-the spotlight is back on a question that that has long dogged the airline. Does India need a national carrier?
Experts say India can do without one as it has a vibrant aviation market. Nimbler rivals from the private sector have grown in strength as Air India sinks deeper into a morass of troubles. "Air India is not the country's only carrier and thank god for that," says Captain GR Gopinath, who owns cargo carrier Deccan Aviation.
In recent days, politicians, economists and analysts have taken aim at the carrier's protracted agony since an ill-fated merger with Indian Airlines in 2007. They have all used oft-cited statistics, particularly total losses at Rs 13,000 crore in 2009-10, to hone the argument that the carrier is beyond help. Truth is it is worse than what they think.
A new study by Air India's top managers to assess its state, the first comprehensive exercise of its kind since Vayalar Ravi took charge as civil aviation minister this January, says the airline is left with a pitiful sum, by airline standards, of Rs 4.5 crore a day to meet its expenses.
08/05/11 Binoy Prabhakar/Economic Times

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Categories: Air India May 2011