Sell it or Shut it

There is no one reason for the mess in Air India, it is a combination of mis-management, political interference, employee hostility and lack of conviction on part of the government to either make it a successful business, divest it or lock it down.

From buying aircraft, over-expenditure and general mis-management there is nothing going right at Air India. The latest CAG report slams Air India for 'wasteful expenditure', 'inefficiency', and 'excessive delays' in repairing and overhauling its fleet's engines, resulting in huge losses for the airline.

The merger of Air India and Indian Airlines to create a company called NACIL is a marriage between incompatibles said the Parliamentary committee, the combined entity turned out to be as loss making as the separate entities. ”The Maharaja had become a pauper a long time ago,” said Capt Gustav Baldauf, who was brought specifically in to oversee the merger of Indian Airlines with Air India. He has been kicked out for asking the government not to interfere in his job.

With total accumulated losses of USD 3 billion, bank loans worth USD 10 billion and millions more to be paid to the oil companies it is a story of throwing good money after bad.

It definitely has a social role to play, flying to non-profitable domestic routes and provide help in evacuating citizens during calamities. But we have a situation where the airline management has opted out of profitable routes. Is there a surreptitious attempt to make the airline unprofitable to kill it; is there an attempt to aid the private operators by doing so? A particular minister was suspected of hobnobbing with private airline owners. It was the top carrier in the Indian skies a decade ago today it share is a pathetic 16%.

No one seems to own the beloved Maharaja, neither the politicians, nor the management, and not even the unions. Everyone has their own vested interest and no one is serious to save it.

Can Air India be profitable ever? It is basically a management problem which can perhaps be addressed and a turnaround made possible but only without political and government interference. Is that a possibility?

The next question is can the government find a buyer for the loss making airline? The economic environment will be a deterrent for potential bidders. Should the airline be stripped down and sold in parts and let the government run a smaller corporation to address only the social obligations. I think this is possible solution.

As long as the government keeps inducting equity into the airline without a radical shift in its strategy of running this business it is throwing money down the drain, we need all this money to build schools, hospitals and Infrastructure in the country, not to keep feeding this white elephant.