The
erstwhile Tata Airlines has been nationalized in 1953 to create an Indian
National airline.   The JRD Tata airlines
were operating with minimum profits but with highly professional carrier.  Every Indian was proud of Air India and it
offered    truly a Maharaja Service.

 

However,
over the period of time because redtape and various adverse market conditions,
its performance affected negatively. Further, trade unionism and politicians interventions
in its working and day to day operations also contributed the downfall of a
prestigious airline. Today it is company with 50,000 cores debt and Government
is struggling to keep it running.   The main
reasons this prestigious company becoming a debt laden company is as follows:

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1)     
Non professional Management – The
new routes were planned under political compulsion and maintained even though
it is making loss on these routes.

 

2)     
Ineffective utilization of Manpower –
Too much manpower to operate a plane.  
This carrier employed more than 475 (including ground staff and cabinet
crew) to maintain and operate many foreign routes.  While Indigo operates Boeing wide bodied jet
with 70 to 100 personnel. 

 

3)     
Militant Trade Unionism – Due to
trade unionism, the workers got wage hike even though   airline was not making any profit.

 

4)     
Improper Financial decisions – Improper
decision to purchase wide bodied aircrafts.  
Originally it was planned to purchase 28 aircrafts for its operation
from Airbus.  But due to extraneous
reasons order has been revised and Air India purchased 118 planes.    Presently Government set up a CBI enquiry
on this matter.

 

5)     
Easy Money availability –  The funds 
were  provided to Air India for
purchase of  new aircrafts by
Government  out of  tax payers money without any  proper evaluation of  past historical profits.  In the end, Air India has to service huge
debt by borrowing money again and again from Government budget provisions.  90 million is the interest liability whereas
profits of this organization are only 10 million.

 

6)     
Protecting Profitable Routes –
Surrendering of Profitable routes to foreign country airlines.   Few 
profitable  routes  were 
given to Emirates and Singapore 
airlines  by government   without 
getting  proper  routes 
for our   national carrier i.e.
Air India.

 

REVIVAL PLANS

 

Almost all countries, like UK,
Japan, America, Germany and other European countries have exited from airline
operation and sold their national airline company considering the cost and
market fluctuations involved in operating an aircrafts.

 

Best
strategy for this Air India available for Government is to sell this Airline
while it is in operating condition  
rather than continuing operation of Air India by providing funds to this
sick company. The Tax payer’s money which can be utilized for education and
other infrastructure projects.

However,
if Government due to political pressures wants to continue with the operation
of Air India.  The following points to be
given proper weightage so that tax payer’s money is not wasted.

 

1)     
Induct
professionally qualified management team – Even now, its head is an IAS cadre
who are not so conversant with managing transport business. 

2)     
Commercial airliners are monstrously
expensive gadgets – Airlines take on large debts to buy them. The usual process
is for airlines to buy a plane, sell it to a lender and lease it back. This
eases their debt burden somewhat because the airline repays the lender via
periodic installments rather than a one-time huge sum. In addition, maintenance
and repair is expensive. Second, aviation turbine fuel (also known as kerosene)
constitutes a large proportion of operating costs (often between 40%-45% of all
operating costs) and is completely outside the control of the airline.

Third, trained pilots and crew and engineers are expensive.
Four, parking slots are expensive.

3)     
Permit
Management to retrenchment of staff wherever necessary. Introduce performance
based ratings. In most of the public sector units, performance based reward
approach is not used, and hence the staff is not motivated to work.  

4)     
Operate
only on   profitable routes.

5)     
Discontinue
all concessions given on these airlines to various political persons,
government officers.   No where in the
world such concessions are given by privately operated airlines to their
politicians, till it makes operating profit.

6)     
Take
suitable decisions of various trade discounts to be given.  Trade discounts are to be given to capture
business.  Business decisions should not
be questioned or analyzed by politicians at a later date.  If critical review of decisions taken by
professional are questioned every now and then or selectively then no one will
take decision and improve the financial health of our national carrier.

7)     
Once
control is given to professional team then their decisions to be followed with
respect both by government and employees.  

8)     
Infuse
patriotic feeling and proud to utilize our national carrier even with small
discomforts.  This will save lot of
operating expenses of our national carrier.

9)     
Workmen
should diligently carry out their jobs and try to maximize the utilization of
aircrafts.  90% capacity utilization to
be achieved then only Air India will turn into a profitable organization.     When Singapore Airlines, Emirates Airline,
Indigo, Jet Airways are making profit why not our National carriers cannot make
profit.   Of course government should
bear the cost of interest burden as 118 planes were purchased under government
intervention.

10) 
Government
should also negotiate profitable routes for our national carriers at diplomatic
level when they sign various trade protocols. 
Even America is lobbying for their farmers and manufacturers then why
cannot Indian politician take care of our National Carriers.

11) 
The
number of foreigners and domestic travelers are increasing day by day and hence
it is possible that with dedicated workforce, Air India can also make profit.

 

Hence, the above mentioned points, according to me, will
help Air India turn from a loss making to a profit making organization.