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Troubled Air India now faces five new hurdles ahead of its divestment

REUTERS/Kamil Krzaczynsk
Trying to fly debt-free.
Niharika Sharma
By Niharika Sharma

Aviation and social media reporter

The Narendra Modi government’s plans to sell off loss-making Air India may remain a pipe dream.

From disgruntled pilots who have resigned to oil companies threatening to cut off fuel supply, a fresh set of hurdles to the proposed sale have emerged.

The government renewed its efforts to privatise the country’s flag carrier this July, after it failed to find a buyer for a 76% stake in March 2018. This time, the centre may be prepared to sell its entire stake and the expression of interest (EoI) could be invited by October-end. A panel headed by union home minister Amit Shah had met on Sept. 19 to explore options.

Air India’s sale is also critical to meet the government’s Rs1.05 lakh crore ($15 billion) divestment target in the current financial year. But if only it was all that easy.

  1. Pilots’ protest: Yesterday (Oct. 13), Air India was rocked by the mass resignation of 120 Airbus A-320 pilots, who said their various demands went unheeded by the management. “Air India’s management should listen to our grievances. Our demands regarding salary hikes and promotions are long-pending, but they (the management) have failed to give a strong assurance,” a pilot, who resigned, told news agency ANI. He further claimed that the pilots who quit were hired on a contractual basis, for five years, at a low salary and were initially hopeful of eventual hikes.An Air India spokesperson assured there won’t be any shortage of personnel despite the incident. The national carrier employs 2,000 pilots, of which 400 are executives.
  2. Fuel bills: The labour crisis closely follows an ultimatum sent by state-owned oil marketing companies on Oct. 10, asking Air India to pay its pending fuel bills.Indian Oil Corporation (IOC), Bharat Petroleum (BPCL), and Hindustan Petroleum (HPCL) asked the airline to pay a monthly lump sum by Oct. 18 or threatened to stop jet fuel supply at six major airports, including Mumbai and Delhi. Air India has so far been making daily payments for its fuel purchases but has been unable to make any lump sum payment so far. In August, the three oil retailers had stated that Air India owed them a cumulative Rs5,000 crore with payments being delayed by almost eight months. At an event in New Delhi, today (Oct. 14) IOC chairman Sanjiv Singh said the airline owes Rs2700 crore to the firm. On Aug. 22, they stopped supplies to Air India at six airports, including Kochi, and Pune. The supply was resumed only on Sept. 7, following government intervention.
  3. Opposition from unions: Air India’s largest union is vociferously opposing the “politically motivated” divestment process. The Air Corporation Employees Union (ACEU), whose members include the non-technical staff, has said that it will launch a “united struggle” against the privatisation bid, accusing the government of ignoring it.”The decision taken at the political level is fraught with disastrous consequences both from the point of view of the civil aviation sector as well in the interest of the nation,” the union said in a statement on Oct. 10.The Air India management is expected to meet the trade union today to try and reach a consensus over the sale process.
  4. Deepening cash crunch: Air India’s balance sheet, meanwhile, is turning from bad to worse.At a time when budget carriers like SpiceJet are posting record profits, the national carrier has suffered net losses of Rs8,400 crore in the financial year 2019, up 57% from the previous year, particularly due to high aviation turbine fuel prices, rupee depreciation, cost of debt servicing, and an airspace closure by Pakistan.Earlier, it was reported that Air India does not have sufficient funds to pay salaries to its staff beyond October.
  5. Bad press: The carrier has also been making headlines for all the wrong reasons, denting its image.Recently, a member of parliament was served an omelette with eggshells on a Pune-Delhi flight. In June, Air India suspended its regional director for the eastern region for allegedly shoplifting in the duty-free area of Sydney airport. The suspension was later revoked, which resulted in accusations that the airline was lenient towards erring pilots.The same month, India’s aviation regulator suspended a pilot for six months for a “physical altercation” with a cabin crew member before take off.

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