- Since 27 February, Air India is losing 6 crore every single day due to canceling and re-routing of flights on few international routes due to airspace ban.
- Air India has lost Rs. 7,635 crore in one financial year.
Civil Aviation Minister Hardeep Singh Puri told Parliament that the plan to sell Air India (AI) had been halted due to volatile rupee and high oil prices. Although the ministry clarified in a further statement saying that privatization is still going on and the statement by Puri was totally analysis based.
Air India is in Big loss
Air India registered a hike in their total debt from the last financial year. It’s net debt rose to Rs. 58,352 crore from Rs. 55,000 crore from last year. It has lost Rs. 7,635 crore in one financial year. AI’s losses from last year rose to 38 percent.
Since 27 February, Air India is losing 6 crore every single day due to canceling and re-routing of flights on few international routes due to airspace ban.
Reason For the problems
In reaction to India’s airstrike, Pakistan has banned the eastern airspace and then extended it to 12 July banning all transit and flying flights to India. Air India has written to International Air Transport Association (IATA) for help.
“If we would have been a private airline, we would have shut down by now,” stated an anonymous Staff of AI.
Problems of the Airline Industry
In recent times, Jet Airways went bankrupt because no one was able to buy it. In this scenario where Air India is having a more compromised balance sheet Jet, how will government plan this whole process is a big question.
Air India is short on cash and won’t be able to pay salary to its employees after October amid its repayment of debts and government planning to sell 100 percent stake in the airline.
It is currently looking at debt repayments of Rs. 9,000 crore in the Financial year 2018-19. It is looking at the government for the help which looks unlikely since the government is planning to divest its 100 percent stake in the national carrier.
The government needs to retrench the AI’s staff first if they are serious about the privatization of the airline.
A big part of the problem will be solved by the government with hiving off AI’s debt into another company and using the sale of some of its assets to partially pay for this. But it is not clear when this hemorrhaging is going to stop since, while Air India is a full-service airline—although nowhere as classy as Kingfisher or Jet—its fare realization is lower than even IndiGo’s. Fixing this means the government has to get rid of AI’s excess manpower by compulsorily retiring them, not by asking the potential buyer to do so.
With entities such as Air India, BSNL and MTNL at the helm which are consistently in loss, Government is wasting taxpayers money on such entities. Let’s hope the Government comes up with some solution to save one of the biggest and oldest airlines of India.