Even in a year when international traffic to and from India grew 15 per cent, Air India couldn't hold onto its traffic. As Air India lost ground in the international skies, Indian lost ground in the domestic market. With 148 aircraft currently in operation, the management attention has been inordinately focused on the need to order more planes rather than managing the existing ones.
India’s state owned, Air India’s loss for the fiscal year ending 31 March is around Rs20 billion rupees ($462 million), according to its own Spokesman. The reports have also quoted its Chairman, Mr. Menon as saying the national carrier will be seeking government aid in the order of hundreds of millions of dollars. Air India’s last year’s loss figures was Rs 448 crore.
Recently, a top ministry official told Business Standard that he thinks Air India’s losses for the first few months of this year will be in the range of Rs 200 crore every month. But India’s privately owned airlines like Jet Airways continuing to expand (adding its 20th international destination – Dubai – to its network) and Kingfisher Airlines set to embark on its international expansion (to London initially, followed by the US, from next month).
Air India is in no mood to give an inch to the local rivals. As a result, the red ink must continue to flow – and subsidies also. Air India have been poorly equipped to cope with the influx of competition, much less the run-up in fuel prices. Air India has significant aircraft orders outstanding, but funding the new aircraft is becoming an increasing challenge.
Arabian Gulf countries are the largest trading partner of India and home of 5 million of Indian workforce. Air India and Indian Airlines with their monopoly in the Gulf sector have been exploiting low-income workers for several years. Gulf sector has been a traditional cash cow to Air India operations and its management channelized the profits from this sector to compensate its huge debts caused by mismanagement and corruption. For eg, Air India’s Mumbai-New York direct flight started in September 2007 — is doing very badly in terms of load factors and, surprisingly, its economy class that’s bearing the brunt while business class seats are occupied by civil servants and rich business man.
The Indian government has permitted competition in all sectors in India except the India-Gulf airlines sector. Air India Express,the budget airlines of AI, mainly operates to the Middle East, has 18 state-of-the-art B737-800 aircraft.
According to a Centre for Asia Pacific Aviation (CAPA) report, the Indian subcontinent’s flag carriers are shackled with low productivity levels and ageing fleet from years of neglect by their government shareholders, high fuel prices have magnified the problems at Air India, Pakistan International Airlines (PIA), Biman Bangladesh Airlines and SriLankan Airlines.
Pakistan International Airlines is said to be losing USD 20 million per month this year. Biman Bangladesh Airlines is expected to have generated losses of USD 12 million in 2007-2008, down from a provisional estimate of USD 80 million. SriLankan Airlines reported a USD 5.5 million loss, due to higher fuel prices.
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