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Plane truths

On Air India,UPA’s real choice is: fix what you ruined,or shut it down.

Written by The Indian Express |
December 31, 2010 2:57:58 am

The government is being forced to,once again,look at India’s troubled national carrier. It has accumulated losses of over Rs 5,500 crore; Public Enterprises Minister Vilasrao Deshmukh said on Thursday after meeting Civil Aviation Minister Praful Patel that they both agreed the airline needed to approach the Board for Reconstruction of Public Sector Enterprises. This is on top of the Rs 1,200 crore equity infusion the airline has asked for from the government.The airline might have begun to look like a money sink. If it has,then the UPA cannot escape blame. Air India has been made to take on more loans than it should have,since the government was party to its buying $11 bn worth of planes instead of the politically difficult decision to shut it down. While reform of its wage bill — which the civil aviation ministry accepts has made “little progress” thanks to “the probability of industrial unrest” — remains necessary, given its balance sheet,even a tweak of the 17 per cent of its operating costs that are wages and salaries will not be sufficient. The government will need to take much larger steps than it appears comfortable doing. Air India has huge debts and a minuscule equity — even if the airline was run like the world’s best,it has no hope of servicing the debt with its equity base.It remains this newspaper’s conviction that a decision about Air India’s future should be taken rationally,with minimal emotion. This is not the 1970s. National carriers serve little public purpose; the mushrooming of private sector airlines,together with some minimal,light regulation of tariffs and routes,has ensured that India’s citizens,regardless of location,are far better connected by air than they ever were earlier. Nor do we need Air India to be a visible,iconic brand internationally. India’s soft power rests on the inventiveness and efficiency of its private sector; we can leave the branding exercise to them. As the government sits down to decide what to do with Air India,a drearily familiar exercise,it should not fool itself that some tinkering will be enough. The only real choices are big,big steps: fix what you ruined,or shut it down.

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