AIR INDIA – TIME FOR AN END

The aviation sector has been hurt with rising cost of fuels, inability to meet its day to day operational expenses and high user fees charged by AAI. Beside this, rise in service tax rates also is not going to help these companies.

With mounting losses, government’s consideration for 49% FDI in aviation sector is a welcome relief.  Air India is no different to this scenario. We quite often see regular strikes by the employees of the company for non receipt of their salary and for various other reasons. With liabilities over Rs 40,000 crores, the aviation is surely headed down south.

Government is now going to infuse Rs 30,000 crores over the next 8 years. Capital infusion will take place in phases. Also, if see the performance of these companies, it’s no good. It’s always in red. These losses keep piling every year. There was a point of time, when before merger, Air India was making profits. Tide has changed its course.  Government’s strategy has gone for a toss.  But whose money the government is pumping in to the Air India. It’s ours, the common man. Our hard earned money is going down the drains. But if the situation of Air India does not improve, what can be done to avoid wasteful expenditure of public money?

The government can sell of Air India to another entity (privatisation), where the airlines can turnaround. Another option is to bring Air India to the ground i.e. nothing but end of Age old Maharaja of India.

Since no other entity would take up Air India because of the crisis it is in, the second option would suit Air India. At least it will save the taxpayers money.  The Indian government need not borrow funds to run airlines, in a way it will reduce mounting fiscal deficits and the same money can be invested in a way benefiting the larger part of India instead of a smaller one.

An action needs to be taken quickly in the best interests of the country. Hope the government wakes up to the situation.