Maybe Air India is "too big to fail"?

Looks like the Indian government is getting set to perform a bailout of ailing flag carrier Air India, which has lost almost $1 billion in the last fiscal year. Indian Civil Aviation minister Praful Patel sounded an awful lot like Barack Obama talking about GM when he said that "it doesn't mean there is a checkbook open to Air India... It will be difficult for the government to keep continuing our support unconditionally."
In order for Air India to get the money (over $800 in the form of equity and loans), though, the government is forcing the airline to cut costs and become leaner and meaner (sound familiar?). Air India has to submit a cost-cutting plan to the government within one month, including a plan to cut personnel costs and dump unprofitable routes. Not that long ago, the airline attracted quite a bit of attention after deferring the salaries of its employees for two weeks; more recently, Air India's senior mangagement have been asked to work without pay next month.
Maybe keeping Air India afloat is a point of national pride; after all, the airline has always been the state-run flag carrier. But is the Indian government really going to be able to force a bloated, government-owned entity to slim down? Air India's main rival, the privately-owned Jet Airways, also posted a loss for the last fiscal year - but it was just under $200 million, which is a heck of a lot less than Air India's.

photo by hartlandmartin from Flickr, licensed under the Creative Commons

13 comments:

Devesh Agarwal said...

Rightly said. National pride is a major factor.

However, let us not forget the "C" word. Air India has also been the milking cow from whom all these politicians nourish themselves.

Do check my detailed analysis of the situation at Bangalore Aviation.

Anonymous said...

thank you devesh. at least you are not just running air india down like many others because it is 'indian' and realise why air india is in this dire state.

Anonymous said...

Respected Shri Manmohan Singhji,

I think you have made a wise decision of not upgrading Mr. Praful Patel (The Villian Behind Air-India's Air-Sickness).

Please get personally involved on his actions and favouritsms.


We dont want our national carrier to crash.

Air-Indians are the people who created Jet-Airways/Kingfisher through their vast experience.

Good Luck to Shri Manmohanji

I hope u r reading this

James Klich, NC said...

The worldwide financial system is failing. We need to rethink everything including airlines.

Anonymous said...

Intelligent Guys of India,

Please do not go by the media reports which pampers our minister of civil aviation Mr. Praful Patel. Let me ask him series of questions:

1) Why should a Civil Servant run an Airline of stature of Air-India when Jet Airways has hired people from Air-India in their infancy.

2) Why did he merge the two Airlines viz., AI AND IA. Was it only for showing losses in the Balance Sheet?

3) Why cant he ask his friends' Airlines viz., Jet and King Fisher to fly to those domestic destinations before granting them permission to fly to the lucrative sectors of Air-India.

4) Please do not read depreciation with Air-India's net margins.

5) Concept of Low Cost Airline? Does he know the arithmetic of running a Bajaj Scooter from his native to Mumbai atleast.

6) Mr. Minister instead of trimming the airline, I think you should resign under the guidance of Shri Manmohanji.

The final one

7) While praising the CMD of Air-India, Mr. Patel should have atleast realised his incompetency while he asked the unions of Air-India when he went for their support and advice for cost-cutting. This proves the wrong man in the right chair.

8) Before you giving Mr. Jadhav, 3 years you should not give yourself 3 minutes Mr. Minister.

9) You dont become a competent Minister when you give a interview to your Kingfisher Channel NDTV on the tarmac.

10) Compare losses of AIR-INDIA/JET AND KINGFISHER

11) GOOD BYE MINISTER FOR SPOILING SHRI J.R.D. TATA'S IMAGE

Anonymous said...

It is worthwhile to go deep into the malaise and the rot set-in in Air India. This is the only way to go forward - by effective and decisive postmortom of the past decisions taken by the AI Board and the Management. While it is easy to criticise whole lot of 31000 odd employees but it is worthwhile also to know that in Govt Sector decisions are taken at the top and thrust down the throat of all the employees - there is no take it or leave it,it is all you better take it.So basically it is the Top Management which needs to be sacked and should have been done by now. They should have had the common sense to call quits.
It will also be wothwhile to go into the Asset details of the top brass of Air India to know how much they have milched the cow.

Anonymous said...

Readers,

Privatising Air India is never possible because of the following reasons:
1. Who will give the Ministry guys, politicians, VIPs the red carpet treatment.
2. Who will upgrade every tom dick and Harry to First, Business class.
3. Who will upgrade the servants of these guys.
3. Which airline will allow free excess baggage of these favoured ones.
4. Which airline will operate to the native airport of these policy decision makers without any passenger load.
5. Which airline will give the spouse free plan like AI especially meant for these favoured ones.
6. Which airline can afford to give free complimentary tickets by the thousands to the favoured ones.
7. Which airline has its frequent flier programme ripped apart and assuming scandlous proportions for giving away free tickets.
8. Which airline can boast of giving away its bilateral rights at the drop of hat to its competitors.
9. Which airline can send delegation after delegation for getting commercial surveys done at foreign countries and still not operate.
YES SIR ONLY OUR AIR INDIA.

SO CAN YOU PRIVATISE AI? NO SIR

Anonymous said...

Its high time the International sector of NOW AIRINDIA which include the merged sick maharaja the butler of white men is closed lock stock and barrel till world wide recession is over.All international route of AIRINDIA should be handed over to KINGFISHER Firstly this company is realted to praful patel secoundly if kingfisher doles out money by flying empty route in recession prone europe and usa it will hardly matter to him as he will make up the loss by turning GANGES WATER into daru and there are millions of indian and asian to gulp the kingfisher daru.Maharaja employee should be given option to join domestic route if not these guys should be caught by the coller and kicked out by giving CRS.NO point flying empty JUMBO all over the world for FLYING ALLOWANce sake.IF the route are handed over to KINGFisher prafull patel will be the hapiest man as this guys is heel bent to destroy the NATIONAL CARRIER BY HOOK OR BY CROOK.

aston said...

Years of reaping harvest from the only sector kerala to GCC, and caring less for the common people its high time air india should suffer. They looted the kerala sector only, in any survey its evident. Now its all in the air. Try to respect us and we will too. One who has salt has to drink water.

Air India Complaints said...

It is an absolute atrocity to consider bailing out NACIL. They have created two of the most lethargic airlines in the world. Taxpayers money must not be used to provide relief to these airlines... best to let them both collapse under their own weight.

Anonymous said...

sirji...

air india's wage bill (iA+AI) stands around 3000cr. the losses are around 5000cr per year. if u think u cn find that even if u pay employees sitting at home and not running the airlines the loss would be 3000cr. why blame employees for heavy losses? where the other 2000cr went into? what action is govt of india going to take against board members And mangement for the foolish decisions, which is the main reason for losses tune 5000cr. now they are notlooking at the real reason but running behind employees to cover up there acts and their masters in the minsitry.
ha never will ai run in profits until the management is made accountable for the decisions it is taking..

god have mercy on the employees for their worst state they are facing.

neghat kazim said...

actually the corruption level is so high on air india members so it will happen.

leslie said...

Air India should be totally shut down and banned from flying the friendly skies. This is not an airline but a cattle carrier instead the deserves no mercy for it's terrible service and treatment of passengers. i will never ever travel Air India and I beg all those who read this blog to also boycott this terrible carrier which is consistently late in their schedules, terrible in their passenger service and has the worst airplanes which are dirty and smell horrible from takeoff to landing.