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BW Businessworld

Jotting: Ready To Take Off

Rs 5,574 crore fraud at NSEL — part of Jignesh Shah-led FTIL group — that came to light in July 2013

Photo Credit : Shutterstock

1471936981_ISd7aN_airindia-shutterstock.jpg

Cynics will always find reasons to downplay any news - good or bad. So when Prime Minister Narendra Modi, while addressing the country on Independence Day, mentioned that national carrier Air India had succeeded in registering an operational profit in 2015-16, critics and analyst are out to downplay its importance. But for Air India, an airline running in losses since 2007-08, it is an encouragement and an achievement, howsoever small it may be.

Of course, there have been suggestions of shutting it down to privatising it. But no government at the centre, so far, has the courage to implement those suggestions. There are only two things any government can do given the scale, size, reach and magnitude of Air India. One, to let it drift away by the way of neglect and apathy. Or do something about it. The second option of helping Air India in a way that it can become competitive and profitable is the way to go. And it is heartening to see that the NDA government has gone for the second option. “...in our country, the PSUs are formed to fall in a pit, to fail, to get locked or to be sold out. That has been the history. We have tried to bring in a new culture,” Modi said in his address.

As part of this culture, Air India posted an operating profit of Rs 8 crore for 2015-16, is the subtext of the Prime Minister’s speech. But it is a commendable job for Air India that it flew additional 10 lakh passengers in 2015-16 compared to 2014-15 figures given the fact that the airline tends to top the list of cancellations and consumer complaints.

Coming back to the financial performance of Air India. Since the implementation of the turnaround plan and the financial restructuring, the operating loss for Air India has reduced from Rs 5,138.69 crore in 2011-12 to Rs 2171.40 crore in 2014-15, and Net Loss reduced from Rs 7,559.74 crore in 2011-12 to Rs 5,547.40 crore in 2014-15. Both Passenger Revenue as well as the total revenue for Air India also consistently increased over the past few years. The total revenue increased to Rs 19,718 crore during 2014-15 against Rs 14,713.81 crore in 2011-12. Of the Rs 32,000 crore sanctioned for the turnaround and financial restructuring of Air India, till date, Rs 23,243 crore have been released, the record from the civil aviation ministry shows.

An optimistic view of the performance review of Air India throws up the following scenario. The airline may continue to post bigger operational profits over the next five years, carries more passengers, further improves its services and adds lucrative destinations as it expands its fleet. If Air India manages to achieve all this, the government will get to offload a certain percentage and virtually gets out of its role of being the provider. If, however, the airline goes the other way, god forbid, it will strengthen the case for pulling the plug. For the time being, it is safe to say that the airline is lined up for take-off, hopefully to a brighter future.


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air india jignesh shah ftil magazine 05 september 2016 nsel