Bleeding for Boeing

Hardly a week passes without the cash-strapped Air India being in the news – almost always for wrong reasons. If it is not for incurring heavy financial losses, it would be for the airline’s sloppy safety standards or for a pilot playing truant leaving passengers in the lurch.

 If the public sector carrier had the monopoly for decades until the 1990s, it has been on a slide ever since as it faced competition from the private carriers. The latest commentary on the way the government airline was being run was laid bare by Parliament’s Public Accounts Committee which lashed out at the loss-making airline’s management and the government for purchase of 68 aircraft from Boeing “without anticipating AI’s payment capacity.” The PAC’s argument was that the government in 2005 gave the go-ahead to increase the number of Boeing aircraft to be purchased from 28 to 68 for about Rs 38,149 crore. It observed that a ‘desperate need’ for aircraft was made out and ‘flawed assumptions’ incorporated that led to the revised project report for 50 long range aircraft and 18 small aircraft, totalling 68.  Since at the time of signing of the order, Boeing had promised large investments in India the government should make public what are the offset investments made by the multinational company in the country. 

Ironically, even before the full fleet of aircraft was to be delivered, the AI had to sell 14 of these Boeing 787s while leasing back the same in a restructuring exercise. Besides this, AI last year sold five of its fuel guzzling, long-haul Boeing 777 aircraft to Etihad Airways for an undisclosed amount. It had earlier decided to wind up its loss-making cargo business and put its entire fleet of six Boeing 737-200 freighters for sale, all to shore up deteriorating finances. 

According to the Centre for Asia Pacific Aviation (CAPA), the national carrier lost Rs 34,635 crore from 2007-13; its total debt amounts to Rs 46,500 crore and it has vendor dues of nearly Rs 5,500 crore. In 2012, the government decided to pump in a massive Rs 30,000 crore over a period of eight years to help tide over its dwindling fortunes. The losses forced civil aviation minister Ajit Singh to say that the government “can't keep pumping money” into the ailing airline and that the carrier could be privatised if “the public, government and Parliament agree” on it. Singh backtracked the next day on the privatisation issue but it is high time that all concerned should think on these lines.