The way it should be

Politicians are the same all over.  They promise to build a bridge even where there is no river. 

                                                                                                          ~Nikita Khrushchev

Why Privatisation of Maharaja is a blunder?

Posted by VASUDEVA REDDY on Sunday, July 30, 2017 Under: Political Issues

Maharaja, the iconic airline of India, is struggling to cope up with the political incorrectness. Yes, the Air India is making losses, but, which carrier isn’t? And, you may quirk, Air India is running on public money while the others aren’t. Yes, Air India is running on public money, and that is precisely why I don’t want it to be privatized. Losses of Air India isn’t a new, hence the restructuring plan was laid out in 2012 to make air India profitable by 2022. Air India going well on its path of recovery. I don’t understand the sudden ruckus about of ‘privatization of air India’.

India domestic aviation industry is poised to reach 100 million passengers by the next year, and that’s huge. We are going to be the one of the largest, if not the largest, aviation market in the coming decade. Traditionally, aviation industry is oligopoly, where few players have the largest share. India is of no exception and Air India is having substantial market share in every aspect.

Main reasons that were given to support the privatization of Air India were, poor financial health and mismanagement. Well, the right question should be who is mismanaging the Indian national carrier? Who were behind the controversial purchase of 111 aircrafts which is still under investigation? Who were the culprits behind badly planned and executed merger of Air India and Indian Airlines? These are the primary reason for the disproportionately high debt of Air India. And, bigger is always not better, merger of Indian Airlines with Air India was a disaster.

Improvement of operational efficiency and the profitability of Air India is well ahead of the projections made in 2012 as a part of restructuring plan. Air India is improving. Even if Government wants to privatize Air India, Government has to write-off part of monumental debt that Air India carries in its balance sheet. So, if the Govt have to write-off a part of debt to privatise, why don’t they do it now as the operational efficiency of Air India is improving? When the private sector air lines were not denied a chance to service their debt by restructuring the loans, they can surely allow the same privilege for our national carrier.

By shutting down Air India, which has 31% of total fleet and various prime slots in the airports throughout the world with the membership of ‘star alliance’, government will only invite undesirable concentration in the private sector airlines. As a major economic force in the world, we need a global airline, like Lufthansa or Emirates, and there is no better contender than Air India. India needs Air India to become operationally efficient and profitable but not at a cost of privatisation. Yes, Air India is marred with not-so-desirable on-time performance and poor operational efficiency. The reality is, Air India’s debt burden is a result of bureaucratic mismanagement, and the poor on-time performance is due to the special treatment given to ‘babus’.But, things are getting better and future is bright for aviation industry. In fact, low cost domestic wing of Air India, Air India Express, had become profitable. Even Air India posted profits for the FY 2015-16, thanks to abysmal oil prices. IMHO, no sane private player would like to buy a company which has a debt of over Rs. 45000 Crs. Government has to book some loss for any private player to buy Air India. Instead of throwing good money at the bad, it is better to address the fundamental issues of on-time performance and operational efficiency by giving less preference politicians and bureaucrats. As I said earlier, Air India is improving in both fronts, well ahead of its prescribed schedule and it is the right time to support Air India.

India needs Air India, it is not just desirable but essential too. 

In : Political Issues 


Tags: air  india  maharaja  privatization  privatisation  political  debt  economic  aviation  industry  india  airlines  national  carrier 
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