Air India loses in an year what Jet n Kingfisher owe in their lifetime

Livemint report says Air India's FY 19 loss could be around 7600 crores. This is one year's loss. Almost same as what Jet Airways and Kingfisher Airlines owe to banks over their lifetime- around 8400-9000 crores.

So while we all crib how public sector banks lost taxpayers money funding private airlines, isn't running Air India under such massive loss is like wasting money on one Jet Airways and one Kingfisher each year?

What is the way out?
Privatization isn't working- Airline is capital intensive industry without a guaranteed path to profitability, so many are reluctant to risk

What happens if Govt decides to shut down Air India?

  • Lakhs of jobs will be lost
  • Ticket fares will shoot up as Air has about 15% market share in India and a significant number of international flights each day. We are already seeing price rise after Jet Airways crisis. Another airline going down implies Indigo will have near monopoly- they already have 50% market share, will rise to corner two third of the market.
  • All current loans and outstandings may have to be written off as there's no way to repay the loan if airline is not operating
  • India's reputation will suffer a setback for not being able to revive its national airline.
So it is a tricky situation- would you like to see some part of your tax money going towards covering Air India's losses, so that you continue paying less for your tickets or would you risk paying 2x-3x more per ticket each time you fly? Government is not going to reduce our taxes if Air India stops flying- they will use the money to fund some other loss making PSU- like BSNL or India Post etc.

Best way is to work towards making Air India profitable- bringing in a more capable management and giving them freedom, improving quality of service to regain customer confidence and other measures like cutting costs and focusing on more profitable routes. That is easier said than done- we can only wait and watch..

Similar: Air India's Lethargic staff - observation * Air India direct flight to Copenhagen

No comments

Powered by Blogger.