Suspense around the fate of Air India, which is arguably one of the biggest white elephants amongst public sector enterprises,has been made clear. The airline is reeling with chronic loss and under performance since more than a decade now. Finance Minister Arun Jaitley said that the private sector is capable of handling all flight traffic and indirectly gave a nod to privatisation and disinvestment of Air India.
Interestingly, it was Mr Jaitley only who first mooted the privatisation proposal 16 years ago when he was the disinvestment minister in the cabinet of the then PM Atal Bihari Vajpayee.The news of Air India being sold out won’t be surprising to industry observers. Instead they will say it was long overdue.
The colossal debt that Air India has mounted is close to 50,000 crore INR and it made an operational profit of only 105 crores in 2016, but standing debt lead to incurring loss. In 2015 its net loss was 3,836 crores.
This loss making venture,which is mostly used by government officials for flying,is being funded by taxpayers money since 20 years.
After liberalisation of Indian economy in 1991 and with new global as well as domestic private airlines entering the fray, Air India failed woefully to compete. And its expenditures were bloated.
The airline never looked forward to innovate and make itself competitive. Even when air travel became cheaper and number of domestic flights increased, Air India continued to be in loss.
Air India and Indian Airlines were merged in 2007, with a hope that net loss and financial burden on the exchequer would be reduced. But the reverse happened. The condition of the merger only increased the loss margin.
Aviation minister Jayant Sinha said that the government is looking at all possible ways to make the airlines stronger and has a strategy for it.
Over the years thousands of crores have been pumped into the loss making airline, while there wasn’t any marked improvement in its performance. The bureaucrats who headed Air India should be made answerable. Air India is a classic tale of Indian corruption, mismanagement, indolence, lack of incentivisation for improvement and the tendency of rent-seeking.
This is also a reminder that private sector technocratic and meritocratic professional management is much ahead of Indian politico-bureaucratic bosses.
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