The Hindu Business Line : Air India joins club seeking Govt support

New Delhi, June 28 As and when Air India gets financial assistance from the Government, it will join the league of a growing number of global airlines that have received aid from their governments.

Since 2001, global airline operators have been given more than $5 billion by various governments by way of bail-out assistance. . This quantum of funds will go up several-fold if one includes the multi-billion dollar bail-out package that the US Congress has approved for its airline industry.

In the Asian region, since 2001, the Chinese Government has pumped in $1.605 billion into three airlines— $1.02 billion - China Eastern, $439 million - China Southern and $146 million - Shanghai Airlines.

The Japanese Government too has helped its national carrier, Japan Airlines, by providing over $2 billion. And in Europe, the Italian Government has provided close to $1.4 billion to ailing Alitalia.

In comparison, official sources point out that the Maharaja (Air India) has never received budgetary support except for Rs 568 crore — through a mixture of equity and loan — which was recapitalised to Rs 145 crore after the merger of Air India and Indian Airlines.

“It is incorrect to say that Air India has been squandering tax payers’ money. In the past, fleet acquisition was financed through internal resources. But, now, given the gap of about 20 years between aircraft acquisition and the magnitude of debt burden and falling revenues , some financial support from the Government, which is our major shareholder, is needed,” sources told Business Line.

The Prime Minister, Dr Manmohan Singh, has already put his weight behind Air India and is said to have told the Minister for Civil Aviation, Mr Praful Patel, during their recent meeting that the Government will help as long as the airline is willing to put its best foot forward.

The airline will now begin work on the quantum of funds required, get the proposal vetted by a financial advisor and present its case before the Committee of Secretaries, headed by the Cabinet Secretary, before the funds can be made available.

The airline's finances are in a precarious position, with losses pegged at Rs 5,000 crore for last year. In an effort to curtail its losses, the Air India management and unions have jointly formed turnaround committees, which will identify areas for saving and generating revenues.

The airline has formed nine committees to look into integration of routes, rationalisation schedules, customer feedback, manpower rationalisation and safety among others.