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.
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.
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.