The Mangalore crash could not have come at a more inopportune time for National Civil Aviation Company of India or Nacil, the firm that runs national carrier Air India. Decades of mismanagement and under-investment has saddled the Maharaja with losses of over Rs 12,000 crore and debt burdens of around Rs 17,000 crore. With aggressive competition from private airlines chipping away at its once dominant market position, Nacil has been kept alive by government grants, even while the airlines? management has been given a stiff deadline to affect a turnaround in its ailing finances only last year.
Following the crash of its no-frills flight on Saturday, the flag carrier now faces the challenge of saving its brand and reputation. While the reason behind crash ? human or technical error ? is yet to be established, travellers generally associate a disaster with the brand for a long time.
?With this, brand equity of the airline would further go down,? aviation expert Jayesh Desai said.
Saturday?s tragic incident is expected to further tarnish the airline?s reputation just as it was getting busy to mend its badly battered financials and operations. There were signs of revival as Nacil started cutting its losses in the past few months on the back of an economic recovery and a concomitant growth in air traffic.
Air India had asked the government to help it stay afloat. It had received Rs 800-crore government aid in February against a demand of Rs 5,000 crore. Nacil was formed in August 2007 after the merger of Indian and Air India.
?The incident would have an impact on the airline if the investigation throws up there was negligence on part of airline or pilot training was inadequate,? Centre for Asia Pacific Aviation India head Kapil Kaul said.
A senior aviation industry official told FE that pilots needed special clearance for flying to and from the two South Indian cities of Calicut and Mangalore. External affairs minister S M Krishna was also quoted by agencies as saying; ?It is known and generally understood that the Mangalore airport and the runway is a very tricky one and the skills of pilot would be put to the maximum test while landing in Mangalore. Our worst fears have come true.?
A Bajaj Allianz executive said insurance firms may ask for higher premium from the airline when it goes for fleet insurance.
Reliance General is the lead insurers of Air India with HDFC Ergo, Bajaj Allianz and Iffco Tokio General Insurance Company as co-insurers.
Meanwhile, aviation sector regulator Directorate General of Civil Aviation (DGCA) has ordered an enquiry into the accident, which challenges the country?s reputation as one of the safest country to fly.
Amidst the possibility of a pilot error, the chances of technical snag can also not be denied with several incidents of crash involving B737-800 in the last few years. However, Boeing India president Dinesh Keskar denied any such chance saying, ?There has certainly not been any case in India.? Keskar added a Boeing team from Seattle, the headquarters of American planemaker, would fly to India as soon as practically possible to help investigators.
A top industry analyst, however, rejected the possibility of any problem in the aircraft, as it was almost brand new.
Air India is currently in the process of inducting 111 aircraft it had placed the order with aircraft manufacturers Boeing Company and Airbus. The airline maintained a fleet of nearly 119 aircraft with 73 of them over 15 years old as on March 2009.