n Bailing out Air India is throwing good money after bad The long-standing need to privatize Air India receives new impetus from the pilots' strike action - over pay differentials - that threatens to put the flag carrier into lockdown. That won't do anything for passenger confidence, will further diminish already paltry ticket sales and exacerbate financial woes, something AI's management has repeatedly demonstrated its inability to manage, writes The Times of India in its editorial. Excerpts: Mismanagement long precedes the strike. Chronically unable to balance its books, AI last posted a modest profit in 2005-06. Since then it's been running at a loss and the figures are staggering. The deficit was Rs 2,226 crore in 2007-08, ballooned to Rs 5,548 crore in 2008-09 and touched Rs 1,791 crore during the first quarter of this financial year. Inexplicably, rather than balancing its books, AI went on a spending spree and ordered 111 new planes. That makes for a debt burden so heavy that the Indian Commercial Pilots Association has asked that the CBI probe the decision to buy. Add to this overstaffing - there are 243 employees for every AI plane whereas the industry average is just 150 - and extremely poor aircraft usage - planes fly nine hours a day - and the financial future is bleak. The truth that a timid government cannot face up to is that an airline cannot be run like one of its departments. The only way to save AI is to privatize it, even if it means conceding some ministerial turf (not to mention opportunities for corruption). The government has already put in Rs 2,000 crore and plans to put in another Rs 1,200 crore this year. Yet that won't be enough to save AI. Financial consultant Deloitte estimates an infusion of Rs 17,500 crore is needed. Given AI's past performance this amounts to throwing good money after bad. Far wiser to divest to a first rate private airline capable of renewing the brand. If the government carries on like this, however, even AI's old brand value will soon be forgotten. The assumption is that Indians need a flag carrier not only for prestige reasons, but also to step into emergencies. Unfortunately the former motivation is dead as the dodo - no one takes pride in having a “national” airline any more - while AI is incapable of fulfilling the latter objective. The recent evacuation of Indians from Egypt was criticized because AI overcharged distressed citizens. Put simply, there's no longer a case for continuing with an airline that hemorrhages taxpayer's money. That money would have been far better invested in building roads, schools and hospitals - all of which are areas where we really need a public sector. __
