End Of The Road For Air India? National Carrier Flooded With Resignations, Fuel Supply May Be Curbed But No Takers

The Prime Minister Narendra Modi-led NDA government is making attempts to sell off Air India, India¡¯s national carrier, in the view that it continues to remain a largely loss-making venture.

For well over 17 months since March 2018, the government of India attempted to sell partial stakes of Air India to possible bidders but it failed to garner interest, following which the government may actually be prepared to sell off its entire stake in Air India to private entities.

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"The plan is to sell 100% stake in the airline. The proposal needs clearance from a ministerial panel before it is made public," an official was quoted as saying in Mint newspaper.

Selling off Air India¡¯s 100 per cent stakes is also crucial for the Modi government as it is aiming to meet an ambitious divestment target of Rs 1.05 trillion in this financial year.

However, the Government of India faces several piercing challenges that are leading private players to tread cautiously, and perhaps preventing them from investing in or buying stakes in Air India.

Among the most significant concern is the mass resignation by the pilots of Air India as they are unhappy with their salary and promotion.

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Around 120 Airbus A-320 pilots tendered their resignation after their demands pertaining to the salary hike and promotion were not paid heed to by the AI management. This came in the backdrop of the Central government's decision to initiate the process of divestment of Air India's stake, which has a debt of over Rs 60,000 crore.

Speaking to ANI, a pilot who had recently resigned, said, "AI management should listen to our grievances. Our demand regarding salary hike and promotion is long pending before them but they have failed to give a strong assurance."

He added that the pilots are staring in the face of the adversity as they have to pay back hefty loans. "Even we pilots are not able to withdraw our salary on time," he said.

The pilots are first hired on the contractual basis for five years with a low salary, he claimed, adding that they were hopeful of getting a salary hike and promotion as they gain experience, but to no avail.

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The disgruntled pilots are sure that they will get a job somewhere else as the market is currently open. As of now, IndigoAir, GoAir, Vistara and Air Asia, Indian airlines are operating Airbus A-320 flights.

Then there is the question of the rising fuel prices. As per news agency PTI, Public Sector Undertakings (PSUs) oil majors have asked Air India to make the monthly lump sum payment by October 18 or they will stop the fuel supply at six major domestic airports.

In a letter sent to Air India, the three oil PSUs -- Indian Oil Corporation Ltd (IOCL), Bharat Petroleum Corporation Ltd (BPCL) and Hindustan Petroleum Corporation Ltd (HPCL) -- said "the outstanding has not come down considerably in the absence of the committed monthly lump sum payment".

In August, the three fuel retailers had stated that Air India owed Rs 5,000 crore in unpaid fuel bills with payments being delayed by almost eight months.

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On August 22, Indian Oil Corp, Bharat Petroleum Corp Ltd (BPCL) and Hindustan Petroleum Corp Ltd (HPCL) had stopped fuel supplies to Air India at six airports of Kochi, Mohali, Pune, Patna, Ranchi and Vizag over payment defaults.

These issues are further compounded by low spirit in the aviation industry. The fall of at least two major players over the past couple of years -- Kingfisher Airlines and Jet Airways -- has left little room for entrepreneurs to feel confident about investing in the aviation industry. As it is, Air India, though regarded highly by Indians, has a bad reputation and has received much criticism for its inhospitable treatment of passengers over and over.

The biggest challenge, however, is the economic slowdown that India is currently faced with. Amid cash crunch and unwillingness of the entrepreneurs to invest in key sectors, it is highly unlikely that a major investment will come its way.

Experts have contended that rising debt of Air India that continues to balloon at sky rocketing pace may end its flight forever. At the end of March 2018, Air India¡¯s net debt was about Rs 55,000 crore whereas it rose to Rs 58,351.93 crore at the end of March 2019.