MUMBAI // A strike by Air India pilots has crippled its domestic operations, sparking a fresh debate about whether India's worst-performing public-sector enterprise should be privatised.
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Last Updated: May 04, 2011
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Yesterday, almost 90 per cent of the financially-troubled national carrier's 320 daily flights had been grounded since last Wednesday when 660 pilots demanding a pay rise and better working conditions declared an indefinite strike.
Air India's management has failed to end the deadlock even after threatening to initiate criminal proceedings against the pilots on strike. It alleges the industrial action is "illegal, unfortunate and most irresponsible".
Air India - for which a turban-clad maharaja sporting a curled moustache is the official mascot - was widely viewed as a symbol of national pride. But its deepening financial woes and strikes that have occurred frequently since it merged with the other government-owned carrier Indian Airlines in 2007 are a sign of gross mismanagement, analysts say.
The airline is reeling under a debt load of 400 billion rupees (Dh33.01bn). Its losses amounted to 60bn rupees in the fiscal year that ended on March 31.
In the annual budget announced in February, Pranab Mukherjee, the Indian finance minister, announced an equity infusion of 12bn rupees in the airline. That came after the government pumped in 20bn rupees last year. But the financial stimulus could not turn around the airline.
Vayalar Ravi, India's civil aviation minister, told the parliament in March Air India earned 360 million rupees a day from its operations but spent 570m rupees daily.
India's crowded aviation sector has enjoyed a sharp rebound in travel demand, which rose by 20 per cent to 52 million passengers last year compared with 2009.
But Air India is said to be losing money even on routes that are profitable for most airlines. Its bloated and underperforming workforce is often criticised for flight delays and poor service.
In February, the Comptroller and Auditor General (CAG) of India, an anti-corruption watchdog, criticised a group of ministers in the aviation ministry for purchasing 50 Boeing aircraft the company "did not need" in 2006. The deal cost the company US$11bn (Dh40.4bn).
The CAG has long recommended a reduction in the airline's staff and fleet size.
The airline is also criticised for offering free rides to politicians and relatives of high-level management employees. In March, the airline said the government owed the carrier 8bn rupees in unpaid travel bills for its officials.
Air India is just one of many public-sector enterprises that have been poorly managed for decades and cost the exchequer billions of rupees every year.
More than 20 state-owned companies, including Hindustan Fertilizer Corporation and Indian Drugs and Pharmaceuticals, are said to be "chronically sick".
In 2009, an economic survey tabled in parliament recommended the government "auction all loss-making public-sector units that cannot be revived. For those in which net worth is zero, allow negative bidding in the form of debt-write off". It also recommended the government sell off a minimum 10 per cent stake in all unlisted public-sector companies, a plan that could generate an income of 250bn rupees every year.
"We have always said 'let's have a strategic sale rather than restructuring'. Most of the time these loss-making companies say'if you help us revive, you will get more money'," Montek Singh Ahluwalia, the deputy chairman of India's planning commission, who supports the plan, said last year. "But I have always told them 'if you don't get strategic sale, how will it revive'?"