Economic Highlights
New Delhi, 17 January 2013
Air India A Flying
Mess, Yet…
BABUS THRIVE AMIDST RISING LOSSES
By Shivaji Sarkar
It is a never dying story.
Air India (AI) epitomises the adage, the Government should not be running a
business. Undeniably, the more AI flies, the more it loses with losses increase
every hour. But unfortunately, those who were responsible for the disaster and
should have been penalised instead have been rewarded.
Today, accumulated losses
have crossed Rs 33,000 crore during the 2007-13 financial years. And the 2013-14
losses will add by another Rs 3900 crore. Worse, the airline has a debt burden
of Rs 43,000 crore even as total losses could possibly be under-estimated totalling
around Rs 1 lakh crore.
Pertinently, the Supreme Court issued
notice to the Central Government and Air India on a petition seeking probe
into the “unnecessary” purchase of 111 aircraft costing Rs 67,000 crore in
September 2012.
However, it is intriguing
how a profit-making Indian Airlines, leader in the domestic market till 2001, made
losses. That too, in a planned manner led by three bureaucrats, V Thulsidas,
Raghu Menon and Arvind Jadhav. Shockingly, the trio were made AI’s Chairman and
Managing Director despite the fact neither of them had any knowledge or
experience of running a business. The CAG and Parliamentary Standing Committee on
Public
Undertakings raised questions on this, but for reasons best known these were ignored
by the Government.
In fact, the Centre for
Public Interest Litigation had also sought a probe into taking on lease
aircrafts which again dented the exchequer by thousands of crores of rupees. It
also demanded an investigation why the national carrier left profitable routes.
Notably, successive Civil Aviation
Ministers have just towed bureaucratic plans for more perquisites to its
officers. In reality, this is a camouflage to extend benefit to bureaucrats and
their families. Perhaps, it would be the only airline in the world which extends
freebies to not only to its employee’s wife and children but also to their parents,
brothers, sisters, son-in-law and daughter-law!
Almost all Chairmen and Managing
Directors, including the present CMD Rohit Nandan, avail these perks and free
hospitality, despite rules not allowing these. So, if you are a bureaucrat, your
entire family can fly at the taxpayers’ cost.
If this bad news, worse,
the mounting losses are to be made over by infusion of Government funds to the
tune of Rs 30,000 crore as equity, equal to the budgetary allocation for
Mahatma Gandhi National Rural Employment Guarantee Act. Translated this reads
means the airline is sunk forever.
In reality, more the losses
it has the more it enjoys Government patronage as it has become almost a cash
cow for bureaucrats. They mis-guide the Government on so-called security needs
to keep the airline flying.
Indeed, there are numerous
instances where national carriers, including Sri Lanka airlines, have been
leased out to foreign airlines. But if this happens no one would be able to sell fine
operating aircrafts at throwaway price. Air India (AI) has recently decided to
sell its five Boeing 777-200 long-range planes to Etihad Airways, which has lately
started joint operations with Air India’s arch-rival Jet Airways.
Scandalously, the planes purchased
just six years ago during Raghu Menon’s
term as CMD are being sold for a meagre Rs 2,135 crore, which works out
to just Rs 427 crore per plane, a mere one-third of the Rs 1,400 crore spent on
purchasing each in 2008. Recall, this had raised eyebrows then and is seriously
raising them again.
If truth be told, Menon was closely associated with
the liberalisation of traffic rights to the Gulf, US, UK, China,
France, Germany and Canada. This enabled international
airlines to increase their market share at the cost of Air India. These
agreements were criticised by Parliament's Committee on Public Undertakings and
the Comptroller and Auditor General of India.
Besides, V Thulsidas as CMD
was responsible for the “the merger of Air India with Indian Airlines.” This decision
too was criticised by the CAG. Further, during his tenure brand new aircrafts, Boeing
777s and 737s worth billions of dollars were kept parked on the ground for
months resulting in hundreds of crores of losses every month.
Topped by Arvind Jadhav who gave away prime routes like
Kochi-Doha-Bahrain and Calicut-Doha-Bahrain which were running with 100 per
cent load to competitors. He also withdrew flights from 32 profitable routes to
benefit private airlines, ordered crockery worth Rs 12 crore and repainted aircrafts
thrice. There are among many more decisions that Jadhav took which led to the
airline having mounting losses.
Furthermore,
the Central Information Commission (CIC) in response to an appeal by a Right to
Information (RTI) activist SC Agarwal has asked the Government to disclose all
details relating to Arvind Jadhav’s removal as CMD in August 2011which had been denied
earlier as it was classified.
It seems Air India plans its
losses for the benefit of those who are at its helm of the affairs. It is
strange that those officials who take such Tughlaqi
decisions are never penalized. Why cannot the Government act against them
and recover losses? Why doesn’t it stop paying them pension and all other
benefits?
Instead, Menon was rewarded with a post-retirement
job as Principal Adviser (Archives) of Prasar Bharati at a salary of Rs 1.60
lakh a month, in addition to his pensionary benefits. Has anybody ever
questioned what expertise or knowledge he has for such a skilled job that
requires years of training and study?
In
addition, the CAG has underscored that mega acquisitions of aircrafts, failing
to synchronise lease periods of aircrafts with the delivery of new aircrafts
and settling for only Boeing aircrafts instead of a mix or Airbus and Boeings
and purchasing 68 aircrafts instead of the required 28 were some of the major
reasons for the Maharaja’s mounting losses.
Clearly, Air
India
is a flying mess. During the last decade nothing has been done to take it out
of the red. Rather during the last two years 37,000 additional seats to Abu Dhabi were doled out.
Obviously this benefited rival Jet Airways.
In sum, the
most sensible decision would be to close AI’s operation or at least lease the
airline out to anyone who wants to run it. After all, this has no bearing on VVIPS
security or pride of the nation. The best security would be to save the nation
of corruption flying in the air. Let Indians get rid of Air India and save
their souls. ----- INFA
(Copyright, India News and Feature Alliance)
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