Monday, January 31, 2022

What are the challenges facing Air India after acquisition by Tatas?

New Delhi: It appears that the JRD’s silent prayer has been answered. Last Thursday, the airline took off from the government s runway and landed in the founder’s fold, shedding the air of lethargy too.

The government gave the airline back to Tatas after about seven decades -- a period marked by inefficiency which plunged the airline into a huge debt. As on August 31, 2021, the airline’s total debt was Rs 61,562 crore. Air India also had about Rs 15,000 crore excess liabilities towards unpaid fuel bills and other operational creditors.

But as Air India takes off to reclaim its lost glory under the Tata Group, it will face turbulence in the form of major challenges that need to be addressed. 

For one thing, the Tatas have taken over the airline at the worst possible time. According to media reports, because of the COVID-19 pandemic and high fuel costs, India’s airlines are forecast to be headed for their biggest-ever loss of over 20,000 crore rupees in this financial year. 

The airline never made a profit since its merger with Indian Airlines in 2007-08. In fact, it reported a loss of 7,017 crore rupees in FY21.

Now that they are back in Air India’s cockpit, the Tatas aim to provide enhanced in-flight services and improved on-time performance.

They also have to foster corporate culture among the airline’s employees. According to a business daily, issues such as older aircraft and inferior cabin products also need to be addressed.

Next comes the upgrade and maintenance of the fleet. While Air India has a fleet of 141 aircraft, a mix of narrow and wide-body Airbus and Boeing aircraft, the airline has agreed to hand over only 118 of them in fly-worthy condition to Tatas.

Air India also faces a severe shortage of parts and engines for the 787 fleet. 

Tatas have found that at any given time, there were at least five 787s lying unused due to the unavailability of engines.

Similarly, on the Boeing 777 fleet -- the mainstay for Air India’s lucrative US operations -- at least two aircraft have been found not fit to fly, while the remaining need heavy refurbishing. 

31/01/22 Bhaswar Kumar Krishna Veera Vanamali/Business Standard

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