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Taxpayer money to bail out Air India

June 24, 2009 19:47 IST

Taxpayer money to bail out Air India

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Prime Minister Manmohan Singh on Wednesday assured Air India that the government would put its entire weight behind it, but on the condition that the airline should undertake a full restructuring and shape up by becoming leaner and trimmer.

The government's support is there for Air India, (but) it comes with a condition, Civil Aviation Minister Praful Patel said.


Image: Air India's newly acquired Airbus A321 and Boeing 777-200 LR aircraft at the Mumbai airport.
Photographs: Punit Paranjpe/Reuters
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Civil Aviation Minister Praful Patel, who met Singh on Wednesday and put forward a case for government bailout, said Air India has been asked to give its restructuring plans at the earliest before a committee of secretaries, headed by the Cabinet Secretary.

"The prime minister has said that the entire weight of the government is behind Air India. It is a national carrier and it is our pride. But there is conditionality that Air India must put its best foot forward. The employees must realise that there is a problem and it is a cumulative problem," Patel said.


Image: Praful Patel, Minister of State (Civil Aviation)
Photographs: Vijay Mathur/Reuters
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He said that Air India would require a lot restructuring from within both organisationally, financially and manpower wise. Until and unless serious steps are taken to improve the functioning and the financial viability, it would be difficult for the government to continue supporting the airliner.

The minister said no figures have been given for the bailout and all media reports in this regard were hypothetical and may be based on some sectional views of departments. But he also said bailout did not mean endless cheques being written by government in support of Air India.


Image: An official looks at the newly introduced first class cabin section in Air India's new Boeing 777-20
Photographs: Punit Paranjpe/Reuters
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Meanwhile, demanding a thorough probe by a Joint Parliamentary Committee (JPC), Shiv Sena-backed trade unions in the National Aviation Company on Wednesday sought Prime Minister Manmohan Singh's intervention in Air India affairs.

Earlier, Air India's staff unions, faced with strong management pressure for pay cuts, retort that 80 per cent of employees take less than a third of the yearly Rs 3,500 crore (Rs 35 billion) wage bill.

Put another way, when National Aviation Company of India's wage bill is described as impossible to sustain, the unions say it is due in large part to the salaries paid to the same brass which wants pay cuts, apart from other creamy layers such as pilots and engineers, who get quite a bit through productivity-linked incentives.

Hence, say the unions, it is these sections which need to take the hit in salaries, not their members.

"We represent 80 per cent of the total employees which belong to the low pay category, with average salaries of Rs 15,000 a month. This 80 per cent takes away only 30 per cent of the wage bill. Licensed engineers get productivity incentives which are three times their salary, even though they are not in short supply. The pilots also get huge variable emoluments. The company should look at them, as there is hardly any scope of (pay) reduction from our members," says Dinkar Shetty, president of the Air Corporation Employees Union, the largest union.

Other unions representing non-managerial staff spoke likewise.


Image: Employees of the Airports Authority of India march outside the airport during a protest in Kolkata.
Photographs: Jayanta Shaw/Reuters
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"We demand immediate intervention by Prime Minister Manmohan Singh on the Air India issue. The government t should also appoint a Committee, either a JPC or a Parliamentary Committee to look into the problems that the national air-carrier faces today and fix responsibility on those who have brought it to such a pass and suggest corrective measures," Shiv Sena's Rajya Sabha MP and Air India union leader, Bharat Kumar Raut, told PTI.



Image: Journalists look at a new Boeing 737-800 aircraft Mumbai airport.
Photographs: Punit Paranjpe/Reuters
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The unions which have sought the Prime Minister's intervention are All India Cabin Crew Association, Air India Employees Union, Air India Service Engineers Association, All India Executive Cabin Crew Association and Bharatiya Kamgar Sena-Indian Airlines.The five unions have formed a joint front called the Federation of NACIL Employees (FONE).

Image: An aircraft makes its final approach at an airport.
Photographs: Andrew Winning/Reuters
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The government and management's volte face on the issue of wage-cuts is shocking, Raut said, adding, the move was also contrary to Civil Aviation Minister Praful Patel's statement last year on the issue. 

Air India is working on plans to reduce its expenditure on employees by Rs 500 crore (Rs 5 billion) per annum, with a newly formed Committee re-examining wage and other agreements in consultation with the Unions.


Image: Members of the ground staff watch the inaugural flight of an Air India Boeing 777.
Photographs: Vijay Mathur/Reuters
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