Thursday, January 02, 2020

What does future hold for India's flag carrier? Air India crisis explained

The future of India's flag carrier airline, Air India, is at risk. The state-owned enterprise is currently fighting for its survival, bogged down by crippling debts, loss-making operations, decreasing passenger revenue and mismanagement. Naturally, the question arises out of these tumultuous times - What is the future of the national carrier airline of India? Will it, after all, get privatised? Here's a look at the current crisis that Air India is facing:

According to official sources, Air India currently has a staggering debt of about Rs 58,000 crore, which has been shovelling the airline towards making losses for a substantial period of time. Even on an estimate, Air India is presumed to be suffering losses amounting to Rs 20-25 crore per day. That puts Air India's total monthly loss to about Rs 750 crore and variably, the amount of loss incurred in some months reaches thousands of crores.

In view of Air India's losses, the Government of India, which owns the enterprise, decided to sell the state-owned airline. Announcing the decision, Union Civil Aviation Minister Hardeep Singh Puri had categorically stated in the Parliament that the government is gearing up for the privatisation of Air India. A high-level committee, headed by Union Home Minister Amit Shah, has also been constituted for the same. But according to sources, no major group has shown any interest yet in buying Air India. The reason is clear - a debt of Rs 58,000 crore on Air India is a crippling burden that buyers tend to steer clear from.
Although efforts have been going on for the same for the last several years, Centre couldn't really find any buyers for the airline yet. To provide a history of how long attempts have been ongoing to sell Air India, history shows that the Centre has been looking for buyers for the flag carrier as far back as during the Atal Bihari Vajpayee-led NDA government, right through the Manmohan Singh-led UPA 1 and 2 regimes, and now during the Narendra Modi-led NDA terms. Efforts were made to sell Air India to reduce the losses of the government, but it could not be possible.
Now you might be wondering, what exactly is the reason for Air India's losses? To answer this could prove complicated, as there can be no direct response. A number of decisions were taken during the UPA government which worsened the health of Air India. In fact, the merger of Air India and Indian Airlines is considered to be one of the most primary reasons for the significant losses. Air India and Indian Airlines merged in 2006. In the meantime, many new aircrafts were purchased, some expensive aircrafts were even taken on lease, thereby gradually deteriorating Air India's condition.
02/01/20 Vishal Pandey/DNA
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