1. Air India shame: Time to sell off the third worst performing airline in the world

Air India shame: Time to sell off the third worst performing airline in the world

Air India, the homegrown airline, has been a target of ridicule recently as it was reported that it is among the worst airlines in the world. A recent report ranked Air India as globally the third-worst performing airline in 2016.

By: | Updated: January 10, 2017 1:14 PM
air india, air india airline, airlines, aviation, aviation industry, aviation ministry, kingfisher airlines, aircrafts, air india loss, air india world, air india news, air india plane, air india flights, flights, aeroplanes, aviation news, air india opinion, opinion After the collapse of the Kingfisher Airlines, while the aviation industry finally appears to be blooming back, it is a shame that a national carrier like Air India is considered one of the worst internationally.(PTI)

Air India, the homegrown airline, has been a target of ridicule recently as it was reported that it is among the worst airlines in the world. A recent report ranked Air India as globally the third-worst performing airline in 2016. According to the Bloomberg report, an aviation insights company FlightStats put together a list of the international airlines with the best on-time performance records for the year. The firm essentially tracks cancellation patterns and delays for airlines all over the world. Meanwhile, Air India has dismissed all such claims, but it is not the first time it has been ranked among the worst. According to a Business Today report, in the year 2013, Jet Airliner Crash Data Evaluation Centre (JACDEC) had said that AI was placed third last in a list of 60 airlines which it evaluated. This is a big blow to the national carrier and its global image.

Meanwhile, Air India has been floating on a Rs 30,000 crore bailout package from the central government. The airline has been saddled with a debt of Rs 46,570 crore, including aircraft related loans worth Rs 15,900 crore. A bailout package for 10 years was approved by the earlier UPA government, 5 years back in 2012. Currently, the money which has already gon into the airline is said to be Rs 24,000 crore already. In the recent fiscal year, AI reported operating losses of Rs 246 crore and Rs 461 in their respective quarters. The BJP government had said in the Parliament that the company’s operating losses for the first quarter in 2016-17, which the target was an operating profit of Rs 87.28 crore.

However, Air India for the first time in 10 years had made an operational profit of Rs 105 crore in 2015-2016, mainly because of low fuel costs and an increasing number of passengers. Yet, the reported total losses in this fiscal year (first six months) was over Rs 700 crore. Over-leveraging without adequate assets leads to such a scenario and it was evident when with so many financial crunches and cash paucity facing Air India, it decided to have discussions with public sector banks and sought working capital loans. According to data present in the Parliament, Air India has made borrowings of more than Rs 51,000 crore till March 31, 2015, which is over five times the debt which Kingfisher had.

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Air India has been said to planning to add 35 new planes with an aim to ‘consolidate and expand’ in the domestic and international sector. AI will now have 170 planes, where the AI branded ones are 106, there are 23 in Air India Express (low cost international) and 10 planes of Alliance Air (for regional routes). Meanwhile, the Supreme Court recently asked the CBI to probe into allegations which claim that purchasing 111 aircraft and leasing a few by the company during the UPA-led government was unnecessary and it cost Indians a whopping Rs 67,000 crore. These allegations and accusations include allotment of bilateral routes to private flights.

Also read | Air India protests listing as third-worst airline

Kingfisher collapse in 2012 and huge debts was a result of the iniquitous mismanagement by crony businessmen in the airline. But have the lessons been learnt yet? After the collapse of the Kingfisher Airlines, while the aviation industry finally appears to be blooming back, it is a shame that a national carrier is considered one of the worst internationally. And this is not hard to see how difficult it must to operate a company, which is already mired in so many issues. Instead of plaguing the national economy and shaming the industry in front of the world, it will be better to sell the company off to more able and corporatised hands which can make maximum use of the supportive government policies, especially after the loosening of industry restrictions.

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    Anand
    Jan 10, 2017 at 6:59 am
    The report said Third Worst Performing AIrline among 60. It never said Worst AIrline. Why is the press twisting words ?
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      Avijit
      Jan 10, 2017 at 8:29 am
      The writer needs to put these results in perspective - yes, we understand that AIR INDIA is bottom of the pile, it always has been there. But, there are silver linings - improving bottom line will ensure investments that will be required to turn the tide.The writer of this review is also not aware of the financial nuances and the way Airline Performance metrics are published by Bloomberg, IATA etc. Bottom line is that AIR INDIA will manage need to manage its balance sheet and improve revenue quality. To do this, AIR INDIA should not be treated as a private bus service for politicians - something the previous government MPs have taken for granted.With financial improvement, we would expect better service, investments in new air crafts, long term financial health and hopefully a better ranking in the years ahead.
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        BKSharma
        Jan 10, 2017 at 6:43 am
        He is a paid agent.
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          Nithin Devang
          Jan 11, 2017 at 5:17 am
          A bunch of useless Journalist should tell us if we should sell off our National et or should review it...
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            Kirtimaya Varma
            Jan 10, 2017 at 6:51 am
            Before advising what the government should do with Air India, this paper should advise its writer/sub-editor how to report news accurately. The report says "The airline has been saddled with a debt of Rs 46,570, including aircraft ..." If the debt is merely Rs 46,570, the airline is performing extremely well. The report also says "the target was an operating profit of Rs 87.28..." If the operating profit target is merely Rs 87.28, then why not make Arvind Kejriwal or Mamta Bannerjee or Mayavati the CEO of AI?
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              Optimistic
              Jan 10, 2017 at 8:08 am
              It will keep performing worst ulness following things are take care of in my personal opinion1) It has to stop the sops it gives to it's employees and its retires employees as well as their dependent( even if they are married and self dependent). Consider how this is breaking this airline that a married daughter of an employee is visiting US by paying just few thousand rupees while the actual ticket costs around 70-80 thousand rupees2) It has to stop the sops it gives to the bureaucrats and Netas for free journeys. in the same manner as above.3) It has to have a Professional CEO who has lead an Airline rather than some bureaucratic position in the past. It also need to capture the prime routes and slots to foreign countries which were given to other airlines due to collusion from the aviation ministries.
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                SM
                Jan 10, 2017 at 7:56 am
                The stooges of big business are out for the kill again. Air India is a public et. It cannot be compared with private airlines. It has to keep connectivity across the country regardless whether a particular route is profit making or not. It has to serve India's parliamentarians, high ranking officials, etc. Public ets such as railways, airlines do not function according to profit motive only. Of course newspapers these days do not serve public purpose as every course in journalism would teach you! This kind of reportage is really nauseating.
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                  sundaram
                  Jan 10, 2017 at 9:54 am
                  You cannot blame Air India for its low ranking but the root cause of the problem and blame should be owned by Govt and its policies of ---giving VIP status to MPs, MLAs who can lord over the Airline staff making demands to delay departure; ---allowing promotions to staff to occupy strategic positions not based on merit but based only on reservation policy affecting performance;No other Airlines in the world is subjected such humiliating operational policies.
                  Reply
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