rediff.com

NewsApp (Free)

Read news as it happens
Download NewsApp

Available on  

Rediff News  All News 
Rediff.com  » Business » Don't tax common man to bail out Air India

Don't tax common man to bail out Air India

Last updated on: July 29, 2009 20:50 IST

When Continental Airlines asked Shri A P J Abdul Kalam, our former President, to undergo a security check, Parliament -- the VIP class at large in fact -- was up in arms. (The only VIP that did not seem to mind was the former head of state himself.) I wish there would be an equal uproar about the genuine scandal in the skies, namely Air
India and its doings.

[Strictly speaking, I suppose we should be talking about 'NACIL', the 'National Aviation Company of India Limited', rather than 'Air India'. The holding company was created by the Government of India to merge Air India, Indian Airlines, and Alliance Air. However, everyone calls it 'Air India' since that is what the new outfit will be called
ultimately.]

Air India is bleeding money at a rate of close to Rs 15 crore every single day. As of March 2009, when the last financial year closed, Air India's losses amounted to a breathtaking Rs 7,200 crore.

As part of its 'restructuring', Air India has submitted a list of goodies it would like from that Santa Claus known as the Government of India. It wants the Union petroleum ministry to give it more time to pay its bills, 'initially' for three months. It wants Rs 10,000 crore of taxpayers' money as 'equity.'And it wants a further Rs 10,000 crore as a 'soft loan.'

Let us cut through all this gibberish. The simple fact is that Air India, having run up losses of Rs 7,200 crore and adding about Rs 15 crore worth of red ink every twenty-four hours, is now asking for even more money to burn from the Government of India.

What Air India has not done is to specify how and in which areas it can cut losses. Is it cutting salaries? Is it laying off staff? Has it identified the routes where it is making losses, and if so what does it propose to do about them? Who are the managers, if any, whose heads are about to roll?

I have said that Air India is asking for money from the Government of India. It would be more accurate to say that it is asking to take money from the pockets of the man on the street as the Government of India has no surplus into which it can dip.

Frankly, it is utterly senseless to spend the taxpayers' money on Air India. Is civil aviation truly an area where a resource-strapped government should be directing money?

How many Indians actually use airlines to travel? According to the Director General of Civil Aviation, all the domestic airlines -- not just Air India but the private carriers -- flew 40.77 million passengers in 2008. That is a smaller figure than in 2007 when they flew 42.85 million.

Those may sound impressive but they are a drop in the bucket compared to the immensity of India at large. Even if you take the figure from 2007, that 42.85 million is actually 4.285 crore when you use the familiar Indian system of counting. And India is a nation of over one hundred crore people.

Even if you assume that none of those 4.285 crore passengers flew more than once and that none of them was a foreigner, that still leaves over 95 per cent of India which does not use the air as a means of transport.

What is the common man's chosen means of transport? In India's commercial capital of Mumbai the BEST buses carry 4.5 million passengers every day -- and that is just one city. Indian Railways, which serves all of India, carries 18 million passengers every day.

These are statistics that simply dwarf those of the airlines.

Does the Government of India think that it has money burning in its pockets? If so, why not spend it on improving rail and road transport, the common man's means of travel, rather than on civil aviation, which is a mode open only to the upper class and the upper-middle class.

I would like to point out too that the 42.85 million (or the 4.285 crore) passengers who chose to fly did not all use Air India. In fact, it is a certainty that most of them were using one of the other airlines.

In 2008 the private airlines accounted for 85.1 per cent of all domestic traffic according to the Director General of Civil Aviation. The figures for 2009 are still coming in but the best that NACIL (Air India) could manage in the first six months was 17.4 per cent in April, after which its share started to drop once again.

Let me recap the situation as I see it. Air India wants the taxpayer to give it at least Rs 20,000 crore -- as 'equity' or as a 'soft loan' -- even though it carries less than one fifth of the total number of air passengers, and despite the fact that 95 per cent of Indians simply do not fly at all. At a time when the Government of India is getting ready to run up huge deficits is this the best use of taxpayer money?

And if transport is indeed a priority, spend it on roads and railways, not on civil aviation when the majority of India has simply not seen the interior of a plane. Don't tax the common man to pay for the upper classes' comfort.

T V R Shenoy