“Air India’s turnaround is a tough task,” says Air India chairman Ashwani Lohani.
The government is trying very hard to help Air India come out of the woods.
The profits of debt-laden national carrier Air India are weathered basically by immense interest costs and airport charges while increasing competition from budget carriers is slowing down its business.
Air India was given a Rs 3,02,310 million lifeline by the Union Finance Ministry in 2012 under a Turn Around Plan (TAP) over a period of 9 years to keep it alive.
“As per the 2012 TAP, the government will infuse Rs 1,89,290 million for repayment of government- guaranteed loans/interest till FY 2010-21,” Minister of State for Civil Aviation Mahesh Sharma has said. The government has already approved Rs 17,130 million equity infusion into the carrier for the current fiscal in line with TAP. This equity infusion also includes the financial support towards repayment of principal as well as interest on government-guaranteed loans taken for aircraft acquisition by the airline.
Till March, the government has already infused Rs 2,22,800 million into the carrier as part of the bailout package.
In April, Minister of State for Civil Aviation Mahesh Sharma informed the Parliament that Air India may trim losses by more than half to Rs 26,360 million in FY16 as compared to a net loss of Rs 58,599.1 million in FY15.
A reduction in loss is the only notable performance for Air India to show during the past one year. This, too, was achieved when the ATF prices were low and the passenger demand was high which also benefited other airlines.
Despite all these efforts, the Air India CMD Ashwani Lohani says that turning-around Air India is a tough task.
“To wipe out all of Rs. 2,80,000 million of accumulated losses is a “tall order”. It will take decades to wipe that off.” Lohani said.
All he could say at present: “The airline is looking to become ‘profitable on a year-to-year basis’ in the next three years and not seek any government money beyond the Rs. 3,00,000 million already sanctioned.”
Insiders spoil the show.
Yesterday, Air India was forced to suspend its entire passenger loyalty rewards programme.
Nearly 0.2 million Air India dedicated customers will lose out on benefits. The programme called Flying Returns had 1, 95,000 frequent flyer accounts, but it is yet not clear how many flyers were actually affected. Frequent flyers do not know how the points they will gain while flying during the suspension period will be credited to their accounts. All the affected membership accounts have since been suspended. The entire set of user IDs which have been dormant since the last three months have also been deactivated.
Unscrupulous hackers had stolen loyalty programme points worth Rs 1.6 million, as reported earlier in these columns.
As suspected at the beginning of the investigation by Delhi police, it was an insider’s job, the programme was hacked into, administrators’ control taken over.
The matter first came to light on June 8, when an Air India staffer verifying documents, noticed that one account was already verified by another employee. The document submitted as identity proof was a driving licence, something not on the list of accepted proof. Air India accepts passport, PAN card, voter ID or Aadhaar card as identity proof from customers. Further the driving licence was also found to be fake and an internal probe showed 23 such fake accounts.
The hackers have accessed user IDs and passwords of some of the website administrators to verify several such fake accounts and claimed frequent flyer rewards. The cops investigating the matter said,”The hackers had managed to sneak into several accounts of Air India employees. This is clearly a well-organised crime and we are analysing all possible angles.”
The Delhi Police has said that such an incident was “entirely preventable” had Air India carried out periodic anti hacking drills as mandated by the International Air Transport guidelines. Alarmed officials from the Civil Aviation Ministry have now asked all Indian airlines to conduct cyber safety drills.
Inconvenience to passengers.
Air India has been penalized by the district consumer disputes redressal forum of Vadodara recently for causing inconvenience to a passenger. The airline was asked to pay a fine of Rs 25,000 by the consumer forum that also pulled up the management for deficiency in service and unfair trade practice. P V Moorjani, who was one of the passengers on the Vadodara-Delhi flight of Air India had filed a complaint against the airline in 2009.
Exodus of Air India Pilots Imminent.
Air India’s Boeing 777s fly the farthest in the airline’s network – including on the Delhi-San Francisco route which is one of the longest non stops in the world – but its pilots face a 10% cut under the new pay structure. Now, Air India stares at an exodus of these pilots to foreign, especially Gulf carriers, who are offering them with 1.5 times their present pay, tax free.
No wonder then, despite all his sincere efforts, the Air India CMD Ashwani Lohani says that turning-around Air India is a tough task. The present scenario being 1 step forward, and 3 steps backwards.