Given the current recessionary economic canvas, however, even this move by the government might not actually help the airline fight the drain on its earnings. The drop in load factors has continued unabated. The depreciating rupee has also affected profitability owing to large import payments for spares. Increased fixed costs like landing fees, fuel surcharge and in-flight services have further helped erode profitability.Adding a new twist to the proceedings has been the in-principle approval given by the IA board to induct 50 small-capacity turbo-prop aircraft, which, despite a dole from the centre, could prove expensive to handle. In fact, the operational costs involved for operating a new fleet of turbo-prop aircraft would itself force the airline to hike fares once again. Induction of the new aircraft could also result in losses of nearly Rs 78 crore per annum.

Revenue securitisation deals, sale and lease-back of old aircraft, together with route rationalisation are essential. But in the final analysis, there is no escaping the need to trim staff and improve productivity. The sooner the privatisation programme is pushed through, the better.