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AI was categorically told that it would be difficult for the government to give the airline unconditional support every time it ran itself into trouble.
“Air India will have to go for massive cost reduction and increase revenues in both the short term and long term,” Civil Aviation Minister Praful Patel said after a two-hour meeting with Manmohan Singh, at which top ministry officials and AI’s newly-appointed CMD Arvind Jadhav were also present.
“There is excess flab on the entire body of Air India, not only of manpower but due to salaries and the internal functioning style,” Patel said. “The airline will have to improve its on-time performance, aircraft engineering, commercial operations, especially in the face of competition and choice (available to customers).”
Independent directors will be inducted on AI’s board, and the top management of its business units will be recast, the minister said. “The management restructuring will be completed within a month,” he said, adding, “The complete turnaround of the airline may take around two years.”
AI has been given a month to submit a restructuring plan to a new four-member bailout committee comprising Cabinet Secretary KM Chandrasekhar, Principal Secretary to the PM TKA Nair, Finance Secretary Ashok Chawla and Civil Aviation Secretary M Nambiar. The committee will review AI’s performance every month.
The carrier — sunk under accumulated losses of Rs 7,200 crore and a financial outstanding of Rs 30,000 crore till May 2009, and staring at a loss of around Rs 5,000 crore for 2008-’09 — had submitted a highly ambitious bailout wishlist to the government, seeking an equity infusion of Rs 5,000 crore, a grant of Rs 2,000 crore, and a soft loan of Rs 7,000 crore. It had also asked for a review of sixth freedom rights and capacity freezes on foreign carriers, and curbs on domestic airlines.
Patel dismissed suggestions that AI’s Rs-44,000 crore aircraft acquisition plan could be wrecking its finances. “These are two different issues,” he said. “Debt (for aircraft acquisition) is a long term issue. Deferring or rescheduling aircraft deliveries would not help (the airline) at all.”
On fixing responsibility for the crisis, Patel said: “Nobody is accountable. It is a combination of factors. Air India people have not risen to the occasion.” He also cited increases in fuel prices, fall in traffic, lower yields at low fares and the price-sensitive nature of the Indian market as reasons.
Patel was impatient with threats of a strike by AI employee unions. “Let them go on strike. They will hasten their own demise,” he warned.
The unions have threatened to strike work from June 30. CMD Jadhav will meet them in Mumbai on tomorrow.
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The hapless people of India can not even appreciate that this governmental weight "behind" AI is actually a huge weight "on" the people at whose expense this white elephant AI is maintained for the benefit of a few and free flights for all in the officialdom. They can not feel anymore because countless other oppressive weights of Govermental spending and corruption is already pinning them to the ground. To soften up one more infliction of this in your reporting that this come with a condition is nothing but an insensitive joke on the people.
These sick companies will make the country sick. It is not governments job to run Airlines and hotels. These are cut throat service industries. SELL TO THE HIGHEST BIDDER. Even well run American and European airlines are losing money in this recessionary environment. There is no chance for badly managed AI to survive. It will keep losing money. SELL IT!
..."shape up by becoming leaner and trimmer. "Was He referring to the Air India Air hostesses?
The ownership of air india should be transferred to jet airways or any private airlines who know how to run it.If you enter an air india plane it is like entering any other govt office with 'why you came to disturb us ' look pasted on the flight crews.
I do not know why our government including our learned PM takes pride in wrong things! Air India is a big liability and one of the most inefficient Airlines in the whole world. They suck up a lot of tax payers’ money and deprive India with many developmental projects. Air India’s management is too corrupted and inefficient to say the least. It’s also not the duty of a national govt to run an airlines and bail out that on a regular basis with public money. It’lll be better if Indian govt stop spending public money on this perennially sick airlines and sell that to a suitable private company.