Air India (AI), the only domestic
carrier that had retained
domestic monopoly for a long time, has lost its dominant position
in recent years—its losses mounted and market share plummeted
precipitously in the last two years. A string of
problems starting from the botched merger with Indian Airlines, total
management failure, lack of vision to develop responsive strategies, a change in
the long-term strategic situation, current market pressures and, not the least,
the high wage bill in the form of salary and incentives have placed the national
carrier in a spot of bother. Now it is crashing down in almost all areas. All the
vital signs—productivity of technical personnel (two-fifth of international
standard), employee-to-plane ratio of about 210 employees, compared to an
industry average of about 150, number of working hours per week of cabin
crew (50-55 hours, compared with 70 in other airlines), to cite just a few—are
indicating that the airline is suffering from chronic sickness. Now, AI is
contributing around 10% of global airline losses, with just 0.35% of global traffic, and
virtually is in abyss.
In fact, airline business in the entire world is now bleeding profusely due to
a variety of reasons, starting from rising oil prices to a slowing world
economy. But in India, the problem is more acute. Last year, in India, the aviation
industry lost more than $2.5 bn—almost one-fourth of total global airline
losses—despite accounting for merely 2% of
the global traffic. Kingfisher Airlines, India's largest airline in terms of
market share, which reported a net loss of Rs 2.43 bn ($51 mn) in the quarter
to June, owes more than $199 mn in unpaid fuel bills and is surviving on
bank loans. Jet Airways recorded a net loss of $47 mn in the same period. The
rising aviation fuel prices, burdensome taxes and overcapacity should be blamed
for why India's private airlines are suffering heavily. In order to raise the
market share at any cost, the airlines priced tickets well below cost. Moreover,
according to some estimates, they purchased twice as many aeroplanes as
the market could support. In addition, as competing airlines poached pilots
and mechanics, staff costs escalated, adding to the industry's woes. |
