Air India to seek Rs.10,000 crore from government
17 February 2011
Beleaguered flag-carrier Air India needs more than Rs.10,000 crore from the government for its survival, newly-appointed civil aviation minister, Vayalar Ravi said in Mumbai after meeting the airline's trade union leaders.
The minister had about two days ago met finance minister Pranab Mukherjee in Delhi, seeking a Rs.2,000-crore equity infusion for the airline in the forthcoming budget. The finance ministry, however, has been tight-fisted while doling out funds to the cash-strapped airline in the past.
About two years ago, Air India had sought a similar Rs.10,000 crore package from the government, but it was asked to drastically cut costs, even trimming unprofitable routes. Last year, the government injected Rs.2,000 crore by way of equity.
But Ravi says he is looking at a holistic approach to tackle the airline's problems, and not a piecemeal solution. The government would also review the airline's claims that 65 per cent of the turnaround plan had already been implemented.
Referring to his talks with the union leaders, the minister said the main issues related to differential salaries – for employees of the pre-merger Air India and the erstwhile domestic carrier, Indian Airlines – and the slashing of profitable routes by the airline. The unions claim that the management has been pulling out of some of the lucrative routes, allegedly favouring private carriers.
''I have been told that the curtailment of these routes has resulted in financial losses,'' said the minister. ''I have the list of the routes with me and will be looking into it.''
The pilot's union also complained about the difference in salaries for Indian and expatriate pilots. Air India, like many other Indian carriers, has had to hire foreign pilots on a temporary basis to tide over the acute shortage of pilots.
Ravi is also reviewing the appointments of top executives at fancy salaries, made by his predecessor, Praful Patel. Three top executives – Gustav Baldauf, the chief operating officer; Stefan Sukumar, chief training officer; and Pawan Arora, the COO of Air India Express, who was sacked by the minister last week – get a combined annual package of about Rs.8 crore.