Introduction
For the second time since 2001, talks have begun to privatize Air India’s government-owned subsidiary. For those who are interested in the aviation industry, privatizations of Air India and British Airways (BA) would be too similar. In 1983, Mr. Collin Marshall was appointed head of BA and fired approximately 22000 employees. The airliner was then completely restructured over the next four years. The airline’s focus shifted from customer satisfaction to employee pleasure. After four years of Mr. Marshall’s appointment, the entire privatization process was complete, and BA made a profit in 1987 of $ 280 million. British Airways was privatized by Margaret Thatcher, the late British Prime Minister. The 2001 privatization attempt to privatize Air India was thwarted by a lack of political support for the NDA (Northern Democratic Alliance), the government headed by PM Atal Bihari Vajpayee.
The Problem
Air India’s debt is approximately Rs. Air India has around Rs. 50000 crore in debt, whereas its market share, is just 14%. The airliner is spending a lot to fly in the skies. This money comes from the government as well as indirectly from the public. The aircraft made a modest profit of Rs. In 2005-06, the airliner earned Rs. 16.29 crore while Indian Airlines made Rs. 49.29 million. Both companies were merged in 2007, and new planes were ordered. The debt amounted to more than Rs. Air India lost its way after the merger cost it more than 50000 crores. It was not just the debt that was the problem, but also the workers’ pay-hikes and political strikes. The airline costs Rs. 500 crore per month. These issues allowed the airliner to go from Rs. 5500 crore debt to Rs. 50000 crore in 10 years. The real question is: Who will buy MAHARAJA, a.k.a Air India, in the face of such massive debts on the airlines?
The Hidden Jewels
The Airliner is currently in poor shape due to many bad government decisions. However, there are some positive points for investors when considering investing in it.
Air India’s vast infrastructure of ground handling and engineering subsidiaries will prove to be a massive asset to potential aviation companies.
– It has a lot of assets in the plane area. It owns 140 planes, including 43 A320s that it acquired from other airlines and 15 Boeing 747s. These 777s are able to fly non-stop between the US and Europe. There are also Dreamliners Boeing 787s.
It employs around 2000 pilots, many engineers, and cabin crew.
It also has training centers in Nagpur and Hyderabad. It owns a 32-acre parcel of land in central Mumbai, the Air India building at Marine drive, and a posh colony located in Delhi. It also owns properties in London and New York, Japan Hong-Kong, Hong-Kong, Mauritius, Hong-Kong, Japan, Hong-Kong, Hong-Kong, and Tokyo.
– The airline is also a prime member of Star Alliance, which is a large consortium of airlines.
Air India also has prime slots available for both national and international flights. It has flights to over 70 Indian locations and 40 International destinations.
It is also home to many of the most popular routes in the airline industry, which can make it very attractive to any potential buyer.
Air India maintains around 30 Indian hangers where it can park its planes and do maintenance. Air India is the only airline with such a large number of hangers.
Air India has many human and physical assets that cannot be overlooked.
The Conclusion
First, the airliner will face hard times in terms of undercutting wages, retrenchment, or cancellation of non-profitable routes. The airline will emerge from the darkness. Air India’s case is yet another example of how business can be mismanaged to reap political benefits and how public sector managers are allowed some freedom in administration. While the private sector has not always been booming, they must make tough decisions which is the job of high-ranking management. This cannot be done because of political interference. The UPA (United Progressive Alliance), which led to the airliner falling into debt, should not be sold cheaply by the government. This will make it more challenging to determine if the murder was planned.
