Air India may crash on govt's empty promises

Excerpts from India Business Hour on CNBC-TV18 Watch the full show »

National carrier Air India's turnaround plan is yet to get off the ground. While the much-awaited Group of Minister's meet on aviation once more failed to take any decision on a decisive course of action, Air India's empty kitty, delay in paying its employees, vendors and oil companies is slowly taking a turn for the worse. CNBC-TV18's Mehak Kasbekar reports in detail.

The promises to turn Air India have been made so often, not just by successive aviation ministers, but even prime minister Manmohan Singh, who promised to put the 'entire weight' of the government behind Air India. That was in June 2009; two years since the national carrier has gone from bad to worse.

And there seems to be little help in sight. After yet another failed attempt the ministers have decided to form yet another committee-this time of finance ministry, aviation ministry officials and the planning commission. The committee now has six-weeks to report back to the GoM with a plan that has already been discussed and altered three times before-first by SBI Caps, then by Deloitte Touche Tohmatsu and the GoM again.

Jitendra Bhargava, Former ED, Air India, said, "Where was the need for a committee when you had a professional consultancy group Deloitte who submitted the report. Is there a lack of confidence? Perhaps, yes."

The turnaround plan envisages a revenue enhancement of Rs 5,000 crore and a cost cut of Rs 4,000 crore per annum. This would come on the back of a passenger load factor of about 75%, something that experts feel would be pretty tough.

"Infusion of Rs 1200 crore that the GoM is going to do will not take Air India very far. Its a short term solution, not a well-defined long-term one," Bhargava said.

If you need further evidence of the government dragging its feet, this is it: The airline is owed Rs 973 for flying VVIPs including the President and the Prime Minister of India. But, instead of paying up, the same government has now asked a panel of bureaucrats-the committee of secretaries-to examine this outstanding amount!

Air India is staring at a fate that only the worst managed PSUs have suffered so far. Far from being a strategic asset, the airline is now a basket case that successive UPA regimes have failed to tackle. The slender hope is that with Congressman Vyalar Ravi at the helm after nearly 15 years, the albatross may once again learn to fly.