Air India in 3 Billion Plus Dollars Debt

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http://news.bbc.co.uk/2/hi/south_asia/8125719.stmWhat ails India's troubled maharajah?India's national airline is in deep troubleIndia's state-run and oldest airline Air India is bankrupt.Shantanu Guha Ray explains what ails the airline which carries one ofIndia's most enduring mascots - the maharajah.They are calling it the case of the bankrupt maharajah. Saddledwith lost man-days, unwarranted expenses, unviable routes and hugesalary bills, the state-owned Air India - the airline with a mascot ofa maharajah or Indian king - is in a mess like never before.Itslosses have almost doubled to over $800m in 2008-09 and it does nothave the money to foot the monthly salary bill of its 31,500 employees.Top managers have been asked to forgo their June salaries by a management thatis intent on sacking excess staff.Air India holds 17.4% of the domestic market and 23.5% of the market for flightscoming in and going out of India.Many of its routes are inherently loss-making but politicians have pushed suchroutes for other reasons.Agood example is the recently introduced Srinagar-Dubai flight thatcarries on average 20-30 passengers on a 180-seat aircraft.BleakAirIndia's monthly salary bill is a whopping $650m. Lower rung employeesrepresent almost 71% of the airline's 31,500-strong workforce andaccount for about 19% of the annual wage bill.India's civil aviation minister Praful Patel has already met the prime ministerand sought a $3.12bn bail-out.But the chance of immediate cash flow is bleak because Delhi's top priority isto present the budget next month.AIR INDIAAir India began operating in Otcober 1932The airline has a fleet of 147 aircraftAir India holds 17.4% of the domestic market and 23.5% of the market for flightscoming in and going out of IndiaIndeed the prime minister told Mr Patel that they may only get partial funding."There will be no blank cheque for Air India," Mr Patel said recently.In fact, agreeing to the bail-out would be like promoting a student who hasfailed in all subjects, say experts."Air India will have to earn its bread and some tough decisions will have to betaken," Mr Patel said.Foryears, many have complained about the lackadaisical way the airline,currently cash-strapped and losing an estimated $3.12bn, is run.Currently, Air India has 210 employees per aircraft - that is nearly double theglobal norm.AirIndia cabin crew - recruited before 2004 - still work on averagebetween 50 and 55 hours per week while the global norm is 70 hours aweek. Pilots on the international sector are paid in dollarsand make up to $15,000 every month and stay in five-star hotels when onduty.They get an incentive allowance that is not linked to thenational carrier's productivity. As a result, they can make more moneywhen the carrier is making losses.Pilots in some of the world's top airlines have accepted pay cuts and unpaidleave.AirIndia engineers with 15 years of experience make more than 200,000rupees per month, although their productivity reportedly is estimatedto be 40% of international norms.And employees who are unionrepresentatives for cabin crew and ground staff are officially exemptfrom doing work. Air India pays them their salaries, flying allowancesand maintains their union offices.MessAll of this has slowly added up to create the present mess.AirIndia has already decided to cut its salary bill by $100m and toldworkers that the June pay packet would be delayed by 20 days.Amongthose who will get a delayed cheque is the Indian cricket skipper,Mahendra Singh Dhoni, the brand ambassador for the airline.The airline bought over 40 new planes in the last one and a half yearThe airline has also allowed its employees - except aircraftengineers and pilots - to go on unpaid leave for two to five years.People could even work for rival airlines.But not many are ready to go without pay or to take advantage of the voluntaryretirement scheme that is on offer.VJ Deka, secretary of Aviation Industry Employees Guild, said salaries shouldnot be delayed.Air India chairman Arvind Jadhav has written a personal letter to highlight thecurrent crisis."Wemust face the heat," wrote Mr Jadhav, listing how some topinternational carriers suffered losses over the last six months andfired their employees.Many say the airline suffered after amerger two years ago between the profit-making Indian Airlines and AirIndia, which was making losses even then.The aim was to make Air India one of the top 10 airlines in Asia and among theleading 30 airlines globally.TheInternational Air Transport Association (IATA) says the global aviationindustry is expected to lose about $9 bn this year while the NewDelhi-based Centre for Asia Pacific Aviation (CAPA) has estimated thatthe Indian aviation industry will incur around $2 bn losses during thesame time.The airliner has also decided to phase out oldaircraft and pull out from unprofitable routes. It will lease to anyonewilling some of its prime properties across India.But that could be a distress sale.Currently,there are no serious bidders for the airline, not even for its famedbuilding at Mumbai's Nariman Point, considered one of India's mostexpensive addresses.The cashless maharajah must decide what he wants to do with his excess baggage.And, of course, wait for the cash to come in.The writer is an editor with Tehelka magazine-----------Air India is actually great to travel on nowadays as the food is fantastic andmany of their routes are so unviable that they are almost empty like theSrinagar- Dubai sector described above. I went Mumbai - Bangalore a couple ofweeks ago and it was fantastic. 95% empty so I could lie down and the meal waswonderful. Shame it probably won't continue as apart from enriching it'sunproductive workforce and it's strong union and serving political agendas itsmassive loss making is working towards bankrupting the country.