As per the plan mooted, foreign bidders could buy 26% of Air India or 40% in conjunction with an Indian partner. Employees and financial institutions were to be offered 10% each, with the rest being retained by the government. It had also announced selling a 26% stake in Indian Airlines, which was restricted to domestic buyers. There were three bidders then – Tata in conjunction with Singapore Airlines, Air France with US carrier Delta and Hinduja’s with Lufthansa. But in February 2003, this divestment plan was scuttled. It was all downhill then, with the national carrier like a vacuum cleaner, sucking out all money from the coffers of the Govt. And it continues to remain down in the dumps even now, and continues to suck money and yet, more and more money is being pumped to revive a dead elephant.

Every time, Air India is in news, it has been always been for the wrong reasons – strike, aversion of accident or major tragedy or like the current news – having no money to pay for the fuel it used since Jan 2011. HPCL, BPCL and IOC have sent out a notice to Air India, collectively demanding a payment of around Rs.2300 crore (Rs.1900 crore owed to IOC, Rs.300 crore to BPCL and the rest to HPCL).

Air India’s daily fuel bill is stated to be around Rs.18.50 crore/day from these three oil companies but has been paying up only Rs.13.5 crore. And it started defaulting on the daily payment since January and the oil companies have finally felt that enough was enough.

Two questions here – firstly, how come the private sector airlines manage to pay up? And secondly, if the private sector is able to run its operations in a much efficient manner, why not Air India? The second question is easier – Air India is an elephant which has grown very old but its fixed costs, especially employee costs are huge. And with ex-Aviation Minister, Praful Patel giving up many of its profitable sectors to the private carriers, Air India continues to remain stifled under its own weight of losses. Comparatively, private sector companies are doing much better; not exactly in the pink of health but better than Air India.

Now for the first question, private sector carriers have no option but to pay up. The three oil companies supply jet fuel to the private sector at Rs.1,600-1,800/kilolitre discount to private airlines, which comes to Rs.3600/kiloliter after adding finance charges for 90-day credit period. But every supply is made on the basis of a bank guarantee. On the other hand, Air India does not give any bank guarantee. So the private carriers are not only forced to pay up but have also managed to bring down their outstanding’s.

The Govt is now negotiating for a better discount and better price for fuel in the future. But what about the dues it owes currently?

But the biggest question, overshadowing all others is – for how long can we allow Air India to suck out the tax payers money? How much more good money can be allowed to chase bad money?

Privatisation of Air India is considered to be a bad word as the national carrier is stated to be doing a lot of social good – connecting remote locations and helping Indians stuck in war torn regions. And yes, employees issue is prime most. The Govt can put preconditions and try selling some stake but what is the point if Govt will continue to have management control?

But if no privatization, why an independent Board can’t be appointed to overhaul the complete organization? By independent, we mean that which has no political connections, like Narayana Murthy, Deveshwar Rao, KV Kamath, Rahul Bajaj and many more. And this Board should be given complete freedom to hire and fire and run it the way they ran their successful companies.

Instead of putting all energies into pumping in more money into Air India, the Govt needs to seriously rethink its stand. Or else this huge elephant will fall one day, taking down much more under its dead weight.

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