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Why India does not need Air India

Last updated on: April 29, 2011 23:42 IST

Why India does not need Air India

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Shonalee Biswas


The Air India pilots are on a strike. Of course, this is not the first time when a few hundred pilots have held the entire nation to ransom.

Among other things, the section of pilots on strike wants to be paid as much as pilots of the erstwhile Indian Airlines.

The erstwhile Air India (which used to operate international flights) and Indian Airlines (which used to primarily operate domestic flights and also fly to a few nearby countries) were merged to create the new Air India.

The pilots of Air India were paid more and they continued to be paid more. Pay parity was never introduced. And so the pilots of erstwhile Indian Airlines are on a strike. 

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Photographs: Reuters
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Why India does not need Air India

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While this may be a valid reason to go on a strike, in the bigger scheme of things, it doesn't really matter. The airline has been bleeding continuously for a long time and pilots are anyway paid a lot of money.

The bigger question is does India really need Air India?

The answer is no. And there are several reasons for the same.

Rs 40,000-crore debt

The airline which was one the pride of the nation, during the days J R D Tata was its chairperson, now has accumulated debt running into Rs 40,000 crore (Rs 400 billion).

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Photographs: Reuters
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Why India does not need Air India

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Of this debt nearly Rs 22,000 crore (Rs 220 billion) is working capital debt.

What this means in simple English is that the airline has borrowed a whopping Rs 22,000 crore to keep its day-to-day operations running.

The remaining Rs 18,000 crore (Rs 180 billion) debt was taken on to fund acquisition of new aircraft.

This, of course, tells us very clearly that the airline is not even making enough money to pay salaries of its pilots and other members of staff. And it is borrowing money from banks even to do that.

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Photographs: Reuters
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Why India does not need Air India

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Of course, there is no way that Air India can hope to repay this money given the current state it is in (it has the largest number of aircraft but three other airlines carry more people than Air India does).

But given the fact that it is a government-owned enterprise, banks are more than happy to lend money to it. Having said that, this money can be well spent somewhere else than be given to the Air India pilots.

The pilots have carefully chosen the beginning of the summer season to go on a strike. This is the season when travelling picks up due to school holidays, ticket prices go up and airlines tend to make good money. 

Why should a government run an airline?

The basic question is why should a government run an airline? In the days after Independence when the private sector in India was not well developed, and was also not allowed to develop, the entire idea of a government running an airline (and everything under the sun) was understandable.

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Photographs: Reuters
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Why India does not need Air India

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But why should a government run an airline in this day and age? The airline has got Rs 2,000 crore (Rs 20 billion) from the government during the last two years. In the current financial year the government plans to infuse another Rs 1,200 crore (Rs 12 billion) in the airline to keep it running.

You need not be a genius to know that this money would be well spent elsewhere. Take the case of Mumbai local trains. All this money going into Air India can be better used by modernising the age-old rakes that run on the Mumbai local train route.

If Delhi can have sleek modern rakes running on its Metro lines, why shouldn't Mumbai? And more than anything else an airline is not an essential service like a lot of other things that the government subsidises.

Given these reasons, it might make more sense for the government to sell Air India and spend the money on other more relevant things.

The author can be reached at shonalee.biswas@gmail.com


Photographs: Reuters
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