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A loss-making airline for almost a decade, Air India has no reason to exist

Air India's turnaround was so futile that even after pumping in Rs 28,000 crore into the airline, it could barely generate operating profits (not even net profits) of Rs 403.03 crore in two financial years  (2015-16 and  2016-17).

twitter-logo Manu Kaushik   New Delhi     Last Updated: August 30, 2018  | 20:40 IST
A loss-making airline for almost a decade, Air India has no reason to exist

What purpose does Air India serve? For an airline surviving on Rs 4,600-crore annual bailout package, the reasons for its existence have to be extremely convincing. But that's not the case with the national carrier. It serves a mere 12.4 per cent of the domestic passenger traffic, and competes with aggressive private sector peers like IndiGo, SpiceJet and Jet Airways who are constantly baying for passengers. Air India's laidback attitude has, in fact, resulted in the gradual fall of share - from 14.8 per cent two years ago to 12.4 per cent in the last month.

On the international side, the market share is a bit higher - 16.55 per cent - but the growth has largely been stagnant as the airline is hardly preferred by international passengers. The airline flies over 2.1 million passengers every month.

Air India's turnaround was so futile that even after pumping in Rs 28,000 crore into the airline, it could barely generate operating profits (not even net profits) of Rs 403.03 crore in two financial years  (2015-16 and  2016-17). Just when the airline management was chuffed about this failed turnaround story, the government (duly) realised that it cannot continue to run the airline.

That's when a sale plan was hatched early this year. In 48 days of inviting the bids from prospective buyers, not even a single offer was presented to the government. The experts blamed the way the deal was structured. Even the big pull of AI having landing and parking slots at key international airports didn't work. The sale process was a damp squib but what has followed since then is even gloomier.

The airline was reportedly asking for a Rs 30,000 crore bailout package from the finance ministry recently. Thankfully, the ministry turned down the demand thereby doing a huge favour to the taxpayers. That package would have been on top of Rs 28,000 crore that the airline has already wasted on steering a mythical turnaround.

Even the operational capabilities are sub-par. The airline most often tops the chart when it comes to poor on-time performance, flight cancellations, passenger complaints and grievances redressal. For instance, the airline's domestic operations registered 287 complaints in July, the highest among all airlines. While all other airlines managed to address the issues, AI couldn't close 65 passenger complaints against it.

Whether the finance ministry doesn't approve the package for Air India, the airline will continue to need government's financial support. Its ability to return to profitability seems like an impossible task. Unless the election-bound government plans to maintain a status quo with the national carrier, the only best option available - which is definitely better than dishing out money - is to shut it down.

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