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Union Civil Aviation Minister Ajit Singh caused great turbulence with his statement that privatising Air India may be the only realistic option now. Air India had been reeling under losses of Rs 35,000 crore, accumulated over four years, but had been bailed out by the government with a cash infusion of Rs 30,000 crore over nine years, starting 2012-13, but that generosity is jarring, given the fiscal deficit. While it had managed to control the bleeding somewhat, the airline continues to lose money to the tune of Rs 11 crore a day, translating into a total drain of over Rs 4,000 crore. These losses are despite the government infusing Rs 16,300 crore in the last four years. How much, then, will the proposed infusion till 2020-21 change the situation at Air India? This is a crisis of credibility as much as of finances and operations.
Singh said that while the airline management and employees are aware of the crisis, the decision to privatise would require political consensus and the cabinet's initiative. That's easier said than done, because the last time Singh ventured to speak on similar lines, after a debilitating strike by Air India pilots, political parties united in outrage at the hint of privatisation, threatening a privilege motion against him for speaking of civil aviation policy outside Parliament. But Singh is right, an organisation as moribund as Air India, with no incentive to compete with the rest of the sector, demoralised employees and inefficient practices, needs a fundamental rewiring to survive.
While many are irrationally attached to the idea of national carriers, and see them as embassies with wings, there is no reason why private money and enterprise would deter that project. Examples around the world confirm the wisdom of privatising national carriers, from Alitalia to British Airways or Lufthansa. The government has little justification for sinking money into an airline that has an unfair advantage over the competition and serves no public interest. Till recently, all lucrative routes were reserved for Air India, which had first right of refusal on bilateral air services rights, but only a fraction of seat capacity was actually used. If the question is about the willingness of private airlines to serve "unviable" locations, there are ways to incentivise those routes with public funds, without devoting a whole airline to it, with 221 employees per aircraft. Air India has lost the opportunity to professionalise, and privatisation, after all, should be more palatable than closure.
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