Sunday, June 21, 2009

100% off on all Air India aircrafts... any buyers?

Source: Times of India

Why a strike will benefit AI and everyone
Kingshuk Nag Sunday June 21, 2009

Air India's losses have mounted over the last week. Now it is making a loss of Rs 15 crore per day, up from the earlier Rs 11 crore. This would translate into an annual loss of Rs 5,100 crore. Faced with the situation, Air India chairman Arvind Jadhav is lobbying the powers-that-be in New Delhi with a begging bowl. He wants soft loans and equity infusion into Air India from the government.

He tried to defer the salary payments of staffers by 15 days and suggested that senior staffers skip the salary for June. This because the national carrier has no money at all. But his initiative has been met with a strike threat. The "bada babus" of the government have promised all they can for the national carrier, although they know they can't do anything because the goverment is strapped for funds. Anyway, infusing money into Air India will be like sending good money to chase bad money.

It is clear that emergency measures should be taken to stem the rot in the present phase as the aviation sector all over the world is passing through an acute slowdow. Trying to sell Air India in the short run will be like a distress sale that will fetch publicity but little money. There will be no serious bidders for the airline, not even for its famed building at Nariman Point in Mumbai.

What should be done immediately is to bring about a paradigm shift and start operating Air India like an entity of the present times.

The airline is being run on the paradigms prevalent in the 1970s. Thus cabin crew recruited before 2004 work on average between 50 and 55 hours per week, though the international norm is 70 hours weekly. In fact DGCA rules now permit cabin crew to work up to 70 hours per week. Pilots flying on the international sector are paid in dollars and make up to Rs 7 lakh per month and stay in five-star hotels when on duty. They get an incentive allowance that is not linked to the national carrier's productivity. So they make more money, though the airline can be making more losses. Compare this with Singapore Airlines, where pilots have agreed to take pay cuts and non-paid leaves, just because the net profits are down by half (it is still making profits). Engineers in Air India with 15 years of experience make more than Rs 2 lakh per month, though their productivity is estimated to be 40 per cent of the international norms. They can't keep up on time performance and despatch norms, yet they are not penalized.

About unions, the less said the better. In what is a paradox 100 employees who are union bearers of the cabin crew and ground staff union are officially exempt from doing work. Air India pays them their salaries and, what is more, even their flying allowances. The airline also pays for maintenance and upkeep of their union offices. As if Air India is a charitable trust!

Actually if the union wants to go on strike it may be encouraged to do so. If Air India does not operate at least, there will be a saving on the operating costs of the airline: fuel costs, landing charges, etc. The passenger won't be inconvenienced because Air India holds just 17.4% of the domestic market and 23.5% of the international market, that is, flights going out of India and coming in. With all airlines suffering from overcapacity, other airlines will pick up the passengers of Air India and without a hitch. Many Air India routes are inherently loss-making but the babu-neta combine has forced the airline to fly on these routes for other considerations. A good example is the recently introduced Srinagar-Dubai flight that carries on average 20-30 passengers on a 180-seat aircraft. If the government wants the airline to take such routes it must compensate the airline for it. But the government does not.

As Air India is a 100% GOI-owned company, all its losses are being funded by the tax payers' money. That is your and my money. This must immediately stop.

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