Thursday, August 09, 2018

More of tax payers' money will be wasted if govt holds on to Air India

New Delhi: Niti Aayog vice-chairman Rajiv Kumar has said that Air India Ltd should be made profitable before it is sold so that the government can get a good price. It is a sentiment I have heard earlier - from Swadeshi Jagran Manch National Co-Convenor Ashwini Mahajan at a lunch we both attended. There are others associated with the government and the BJP who no doubt have similar views.

The problem with this line of thinking is that it ignores the reality of Air India. Over the past decade, the government has sunk many thousand crores of tax payer money in keeping Air India afloat. Since 2012 alone, the government has sunk Rs 27,195.21 crore to keep the carrier flying. Reports suggest that Air India has sought a Rs 1,000 crore short term loan urgently from the government for its working capital requirements. The government was anyway planning to infuse about Rs 980 crore this year to support the carrier. Air  India is reportedly so strapped for cash that it has had to delay salary disbursements several months in a row, and also delayed vendor payments. Air India makes losses every year, and last year it lost around Rs 5,765 crore. With crude oil prices rising, all carriers are facing the heat from higher aviation fuel costs. This is going to affect the margins of even super-efficient carriers like Indigo. For Air India, it would mean piling on more financial misery - and therefore more money required from the government to keep flying.

The government meanwhile has shown no great intent or appetite for taking hard decisions and turning around Air India. In 2017 alone, Air India saw three new chairmen - Pradeep Singh Khairola, currently holding charge, his predecessor being Rajeev Bansal who in turn was succeeded Ashwini Lohani. Mr Lohani had taken over from Rohit Nandan in 2015. In fact, Mr Nandan was the last chairman of Air India to have had a decent term - having served from 2011 to 2015.
09/08/18  Prosenjit Datta/Business Today