Air India's mounting woes have taken a new twist, as it has not only defaulted on staff salaries, but is also struggling to pay for fuel and airport usage charges. How long will the national carrier continue to bear the heavy losses?
Air India's mounting woes have taken a new twist, as it has not only defaulted on staff salaries, but is also struggling to pay for fuel and airport usage charges. How long will the national carrier continue to bear the heavy losses?
While the employees of the national carrier speak of life being sucked out of the national airline by "dark forces within the government", and passengers wonder what went awry with the once-glorious carrier, MiD DAY takes a look at how the Maharaja turned into a moping beggar.
Many claim Air India, with its strength of more than 42,000 employees, is not ailing, it is very much on its deathbed.
We find why these claims are compelling, what with the carrier digging itself into a debt hole impossible to fill, and its dream of profits seeming like a flight of fancy at this hour.
Rs 2k cr fuel bill
Air India owes fuel dues of about Rs 2,000 crore to three state-owned oil-marketing companies Indian Oil Corporation (IOC), Hindustan Petroleum Corporation Limited (HPCL) and Bharat Petroleum Corporation Limited (BPCL).
After it failed to pay up, the carrier was placed in a cash-and-carry category in January.
u00a0
It was the non-payment of dues that led to as many as eight domestic and international Air India flights to be cancelled early Friday morning.
Oil firms refused to provide jet fuel and demanded that the carrier pay cash for the ATF. However, the issue was resolved by the evening and the oil companies agreed to provide the fuel.
Air India Chief Information Officer Kamaljit Rattan told MiD DAY that all the issues between Air India and the oil companies have been resolved (see box), and that the total arrears were not more than Rs 1,400-1,500 crore. But sources from the airline confirmed the Rs 2,000 crore due.
Salaries due
The Maharaja has only paid 20 per cent of the salary of its 850 pilots for March. The remainder, which amounts to Rs 38 crore collectively, is due. The April salary is due in full.
"We received 20 per cent of the March salary on May 22. The remainder is due. I don't know if we will receive the dues or not," said an AI pilot on condition of anonymity.u00a0
MiD DAY had earlier reported ('Disgruntled Air India pilots resign in groups', April 25) about how about 100 AI pilots, sick of late payment of salaries, were turning to private carriers en masse. Six had already resigned and more are to follow suit.
Air India also owes above Rs 400 crore to four airports those in Mumbai, Delhi, Bangalore and Hyderabad. Despite charging the Airport Development Fee (ADF), User Development Fee (UDF), and the Passenger Service Fee (PSF) in the tickets, the national carrier has failed to pay the amount to the four airports in last three months.
The amount of PSF also contributes to the salary of security personnel including that of the Central Industrial Security Force.
Of this Rs 400 crore, the Mumbai airport requires Rs 6 crore as ADF, Rs 5 crore as PSF and another Rs 141 crore in outstanding dues, which works out to be Rs 152 crore.
The dues for Delhi airport remain around Rs 140 crore.
"As Air India directly deducts the PSF, ADF and the UDF from passengers, they can easily pay the amount. But for the last three months, they have failed to make the payment," said a source from Mumbai airport.
Owed to AI
All its dues do not mean that no one owes Air India. The union government has to pay Rs 450 crore to AI. The national carrier is yet to receive the amount from the Prime Minister's Office, Ministry of Defence, and the Ministry of External Affairs for the VVIP travels, which also includes the fee for Libya and Egypt evacuation.
"The Government of India (PMO, MEA and MOD) owes around 450 crore to Air India. The government dues also includes the fee for Libya and Egypt Evacuation," Rattan said.
Govt watches AI die: ICPA letter
An internal letter (copy with MiD DAY) circulated among the Indian Commercial Pilots' Association members, dated May 27, also critcised the management.
"The fuel companies have put us under severe restrictions for the upliftment of fuel. This is because Air India continues to default on it's payments while the Government Of India, the sole owner of Air India, stands by the side, watching it die.
The strategy of the management to make us, the pilots, the scapegoats by forcing us to go on strike like they did to various other unions for their absolute incompetence failed when we signed the agreement on May 6, 2011, and withdrew our strike.
As we told our members and the entire nation, there are dark forces at work within and outside the government, who want the demise of our beloved national carrier at any cost for their personal gain.
Even though the oil companies are fully owned by the government, they are now being used to bring about a swift demise of our airline."
The murder of the Maharaja
Jitender Bhargava
Air India has been in the throes of a financial crisis for some years now. The situation, instead of alleviating, has only been worsening.
The infusion of Rs 2,000 crore by the government in the past 12-18 months has done little to ease the situation as a result of which Air India has been defaulting on payments to various vendors, and even to its employees.
The cancellation of flights on Friday due to stoppage of fuel supplies for a few hours by oil companies on not receiving payments over a period of time only presented demonstrative proof to the public of the critical financial situation that Air India has landed itself in.
While resumption of supplies by oil companies on receiving assurances is good news, the problem cannot be said to have been resolved. It has only been deferred to a later date.
With the way the airline is being managed, it is unlikely that the financial problem will ease in the immediate future.
The management has, for reasons best known to itself, been concentrating only on cost cutting measures and government extending a helping hand rather than on enhancing revenues.
Even though the market share in the Indian skies has been falling month after month, the airline has been guilty of taking the softer option of luring passengers through 'attractive' low fares thus adversely affecting the revenues further.
Air India owes above Rs 400 crore to four airports
What should have ideally been resorted to is upgrading the product and marketing it aggressively so that more passengers patronise the airline, resulting in higher revenues. After all a sensible way for reducing losses is to enhance revenues, but that is hard work.
The sooner the management recognises the gravity of the problem, works collectively as a team, and inspires employees to rise to the challenge, the better it will be for the national carrier.
u00a0
There are no easier options left after so much of mismanagement and ad hoc running of the airline.
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Jitender Bhargava is formeru00a0 Executive Director, Air India
Voices
Senior Air India employees have mixed feelings about the carrier.
The former aviation minister is the only one responsible for the poor plight of Air India.u00a0 If other politicians like Kalmadi and Raja are being investigated, why is he being let go? There should be a CBI enquiry against Patel. I am sure the whole story behind the loss will come in front of the public.
Former Air India Captain Vilash Naik, who served the company for 35 years before retiring as a deputy general manager
u00a0
No accountability, no transparency and total mismanagement has made Maharaja a pauper. I have served it for 28 years, so I feel sad at its downfall. The employees always wanted the airline to grow but the top management killed it. The biggest mistake was the merger that was only done with the motive of benefiting private airlines and serving selfish political interests.
Pradeep Khanna, a former chief cabin crew
u00a0
As a passenger, I feel bad about the airline. Even today, it has the potential to beat all of its competitors. The kind of serviceu00a0 Air India provides is unmatched but the stories of loss make us sad. Sometimes we feel that the loss of Air India will be a loss of the country's heritage.
Pravin Solanki, a software engineer and a regular AI flier
The Other Side
Air India Chief Information Officer Kamaljit Rattan said, "All the issues between the Air India and the oil companies have been sorted out. Since the dues increased by December 2010, we started operating on a cash-and-carry basis. But at different intervals, the fuel charges kept increasing and the oil companies wanted us to pay the same, also on a cash-and-carry basis. That issue is now sorted."
Number Game
6
The amount (in crores) that Air India owes to the Mumbai airport as Airport Development Fee
450 cr
The amount (in Rs) the govt owes to Air India
400 cr
The amount (in Rs) Air India owes to four airports
20
The percentage of the pilots' March salary that was paid to them on May 22. The remainder, including the April salary, is still owed to them
Rs 40,000 crore
Air India's cumulative losses till date
Rs 2,000
cr Fuel charges still unpaid to three state-owned oil-marketing companies
850
Number of pilots who have not been paid salaries for the last two months
Rs 400 cr
Owed to four airports as passenger service and airport development fees
Rs 450 crore
Amount that the govt owes AI for VVIP services
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