Air India losses can feed 400 million Indians for a year

I read the following press report and just shook my head. Forget a pinch of salt, there isn’t enough salt on god’s green earth to make this statement fly.

The government would infuse additional equity into ailing Air India provided it saves at least Rs 2,000 crore ($417 million) this financial year by implementing cost-cutting measures, Civil Aviation Minister Praful Patel said on Thursday.

“We are broadly looking at equity infusion linked to its monthly performance parameters and we are only looking at till March (2010). This is not the total equity infusion being looked at for Air India,” he said after an almost two-hour meeting of a Group of Ministers on the issue.

Based on the national carrier’s performance till the end of the financial year, the government would be “able to finally take a call at the end of March as to what will be the final support which the government will provide,” he said.

Replying to a question, Patel said Air India “will have to provide a revenue enhancement and a cost-cutting programme to the extent of at least Rs 2,000 crore by March which will be giving a direction on the way forward.” The airline, which has shown a net loss of Rs 5,548.26 crore in 2008-09, is seeking a total equity infusion of Rs 5,000 crore.

Just a few days ago the carrier reported a whopping Rs. 5,500 Crore ($1.15 billion) loss for financial year ended March 2009. The airline’s total revenue has also fallen 12% to Rs 13,479 crore ($2.79 billion) the last fiscal down from Rs 15,252 ($3.2 billion) crore during the year-ago period.

Let’s put the airline’s $1.15 billion loss in perspective.

These losses were incurred while carrying about 11 million passengers. Simple arithmetic shows that Air India lost Rs 5,000 ($110) for every passenger it carried!!!! (Thanks to Atanu Dey for this idea).

If 400 million Indians live on less than a $1 a day which includes food, clothing and housing. Akshay Patra, the world’s largest NGO-run mid-day meal program feeds, school children a nutritious meal for a whole year for $28. If we extrapolate this, the $1.15 billion losses of Air India can feed 410 million Indians for a year!!!

The losses are across the board and there so many reasons are responsible, one cannot even fathom where to begin.

The Ministry of Civil Aviation keeps poking it’s fingers in to every operation of the carrier. Micro-managing everything, the airline has become the Kamadhenu — the mother of all cows — milked by the political and bureaucratic class she is now being forced to give her life blood since she has already been sucked dry.

So unhealthy is the situation, that the airline was forced to borrow $104 million just to pay salaries.

Yet for majority of the employees, apathy abounds. The Air India – Indian Airlines divide still rules. Recently I was talking to a ground engineer who informed me that two “Air India” engineers were stationed at a location in India despite the fact the station was serviced by only “Indian Airlines” aircraft (read Airbus A319/A320), which have their own set of “Indian Airlines” ground engineers. I casually mentioned to him that I was meeting senior officers of Air India in a few days and I can bring it to their notice. Concerned he begged me not to. “Why threaten my job?? Tell them after I have retired”

Political patronage abounds, stifling and de-moralising the productive efforts by those few employees who still believe in the airline. In the recent pilots’ strike, the Minister, instead of supporting the management, sided with the strikers emboldening them even further.

A lack of training and infusion of fresh blood over the years has ensured that each successive generation of employee is no better, probably worse, than the preceding one. I can consider this As dynamic a leader he is, Mr. Jadhav needs dynamic executers if he has to achieve the lofty performance goals the minister is dreaming of.

Internally, the network planning at Air India leaves any industry watcher shaking their head. Loosing almost $750 million on the prestigious JFK non stops, the airline is now extending the service to Washington Dulles while fully acknowledging that less than 40 passengers will fly on a Boeing 777-200LR between JFK and IAD. It will be cheaper for the airline to buy these 40 passengers a first class ticket on a US airline to fly them.

Just yesterday, the Ahmedabad mirror reported that the Air India flight AI-121 operated by a Boeing 777-200LR and destined for Frankfurt could not be operated since a rat was observed. The 68 passengers were accommodated on a replacement aircraft.

Forget that rat, I smell a political patronage rat here. A 777-200LR meant to seat 240 passengers being used for 68 passengers ?!?!? Which planet are the Air India network planning folks on? With these miserable load factors, why would somebody spend money to fly business or first class when rows of empty economy class seats are available? Why is the airline operating this route at all?

At this rate, instead of calling for tenders to lease three Boeing 747s, India will be better served leasing out the entire Air India fleet. India is the land of outsourcing. Outsource the airline. Air India can then sell code-share seats on other carriers. They won’t just save money, they will probably make a profit, if they are allowed by their political masters to let all those surplus staff go, that is.

The minister may have the loftiest of dreams for Air India; till he unshackles the airline and lets it’s leadership perform or perish, the losses of Air India will continue to mount and suck the precious few resources the Government can better utilise for the national betterment.

Coming back to the subject of food. As a Rotarian, I encourage you to donate. Just go around your neighbourhood and collect just one handful of rice or flour or dal and donate that to an orphanage. Or donate just $5 to help Rotary’s efforts to end polio.

Thanks in advance and god bless.

About Devesh Agarwal

A electronics and automotive product management, marketing and branding expert, he was awarded a silver medal at the Lockheed Martin innovation competition 2010. He is ranked 6th on Mashable's list of aviation pros on Twitter and in addition to Bangalore Aviation, he has contributed to leading publications like Aviation Week, Conde Nast Traveller India, The Economic Times, and The Mint (a Wall Street Journal content partner). He remains a frequent flier and shares the good, the bad, and the ugly about the Indian aviation industry without fear or favour.

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