The more the government gets into it, the greater the mess Air India seems to become. None of the plans hammered out till now, including the ill-advised merger of the two national carriers, has succeeded. The Centre has been in emergency response mode for years, pumping in small doses of equity and loans to keep Air India alive and permanently in the red. Last week, the Union Cabinet cleared a Rs. 30,000 crore restructuring plan for the airline, to be implemented between 2012 and 2021. This includes an upfront equity infusion of Rs. 6,750 crore, and assured equity support of over Rs. 23,000 crore over nine years. The government will also guarantee non-convertible debentures for Rs. 7,400 crore. Given the Centre's own financial crunch, this is a major financial commitment. The immediate benefit for the struggling and virtually grounded airline will be the induction of 27 Boeing 787 ‘Dreamliner' aircraft, whose acquisition has been delayed by three years, at least in part, because of the financial crisis in the organisation. Perhaps, the employees will now start getting their salaries, may be in instalments. The consortium of banks has also cleared the turnaround plan by converting working capital and other loans into medium and long term debts, with a moratorium of one to two years.
But the more significant element in the Financial Restructuring Plan (FRP) relates to the hiving off of two main business arms — ground handling and Maintenance, Repairs, and Overhaul (MRO). The government, under the FRP, hopes to rid the airline of about 12,000 employees to the ground handling unit and another 7000 to the MRO, thereby reducing the staff strength of Air India to approximately 11,000. The objective seems to be to develop these two services as independent, strategic business units that can become profitable on their own. It is quite likely that Air India will enter into joint ventures to run these units as profit centres. The fundamental question remains: Has Air India consulted its employees and unions on the FRP and other plans to make it succeed? It should not remain, like the merger issue, a thorn in its flesh that could lead to further illness. Though the Cabinet has given its nod for FDI in the airline sector, it is very doubtful if the state-owned Air India can ever attract a suitor in the present circumstances. Worse still, the ability and capacity of the state-owned and politically influenced airline to implement a stringent FRP itself remains doubtful. Unless Air India gains autonomy to function as a viable, commercial airline without political interference, such ambitious plans can hardly succeed.
Keywords: Air India, aviation sector, Air India bailout, Air India restructuring, equity infusion, Indian aviation sector, Financial Restructuring Plan, ground handling, Maintenance Repairs and Overhaul
The first question government should ask itself is , Is it the
business of government to run an airline company . How many people in
this country dont have basic drinking water facilities ? It's a crime
against the nation to spend 30000 crores for running an airline
company . This government and to be precise no congress government has
got it's priorities right. The business of the government is not to
run airline companies and telephone companies , it's business is to
provide governance and facilities to people . The best thing that the
government can do is to put the AirIndia for sale . This government
doesnt have the courage to do that and keeps pumping valuable
taxpayers money into that bottomless pit called AirIndia .
The criticism in this article is too mild . The government is acting
shamefully .....
Where is the need to "consult the employees and unions.?" The sorry state of AI is primarily due to official apathy, political interference and last but not the least arrogance and indifference of the employees also. The Hindu still has not come out of socialistic moores of the bygone era. Restructuring AI is akin to throwing good money after bad money. You cannot go on treating a cancer with pain-relievers. If surgery is required, let the govt. do it fast.
Given the mess the National Carrier finds itself in , i am more than certain this turnaround plan will fall flat on its face.The reasons are ostensible High handed of Political class who never miss an opportunity to meddle in its running be it for personal or other purpose. Tax payers money will again go down in drain.If at all you want a Healthy Air India make it out and out professional.Country needs funds for schemes like MNREGA , RTE , NRHM & PMGSY ,these schemes have the potential of changing the face of Nation in next 10 years.And i am quite sure after 10 years we will see another investment commitment coming from the Union Govt for this beleagured Airline.We have lost a fortune already...Govt Fund managers are making sure that we continue to do so .Hopeless & Bleak Future for the National Carrier..if GOI keeps interfering at every whim & fancy.
Air India Rocks:
Air Hostess- do u want lunch?
Passenger- what are my options?
AH- YES or NO.
:)
The delay in the 787 procurement was purely because Boeing was unable to manufacture on time and had nothing to do with Air India. Air India has also reportedly been paid compensation for it which is likely to be in hundreds of crores.
On the govt aid to Air India, It is also worth noting that even US has indirectly funded the carrier, through its EX-IM bank, it has provided guarantees worth $2bn over the past three years.
I would ask Air India top management or the aviation ministry
official to visit the ticketing and reservation office in Delhi and
talk to people waiting there. The whole system is chaotic. Last
year, I wanted to change only my date of travel; I had to wait 4
hours to get my reservation changed. Online travel change is not
possible on AI, AI does not accept card payment online AI website
does not allow to book tickets on any city in USA except where it
flies. You can book multiple airtime ticket on all airlines but not
on Air India. One cannot even book a seat, add frequent flyer number
or add a meal on a booked ticket on AI website. On flight service is
better than ground service but staff involvement seems missing. How
can such an organisation ever make profit? Air India is a decaying
organisation and GOI has no right to spend money on this
organisation.
If the government is running a business enterprise, it must take rational decisions and avoid decisions emotion-based decisions, influenced by employees of the enterprise. Once upon a time, Air India was a crown among the public sector undertakings of the Central government. Situation today is different; airline companies the world over are in financial difficulties. Despite a number attempts in the past to turn around Air India, the airline has not succeeded in retaining market leadership or in achieving economies of scale. Our cabinet still wants to commit huge funds out of tax payers’ money hoping that Air India will survive.
Therefore, the cabinet decision to provide huge financial support to Air India must be rated as an atrocious decision and it is a very arrogant bail out if one wishes to use strong words to condemn the decision.
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