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Air India Privatisation…Good Idea?

STORY
Start privatization with Air India

The Economic Times, May 10

The article strongly advocates the privatisation of Air India.

THE PROBLEM

The privatization of Air India is a complicated issue and it would be unfair to respond with a quick ‘Yes’ or ‘No’ without deliberating the pros and cons.

THE TRUTH

  • Latest data shows signs of improvement in recent years
  • Operating loss has been reduced to Rs2,636.19 crore in FY15 from Rs5,138 crore in FY12
  • A big country like India needs an airline for connecting remote locations with poor seat occupancy ratio
  • As a state-run enterprise, Air India continues to run on many loss-making routes
  • Aircraft availability and more aggressive marketing have improved Air India’s performance and image
  • Low air turbine fuel (ATF) prices have also reduced costs
  • Air India has also plays an important role in crises, such as in the evacuation of Indians from Yemen in 2015 under Operation Rahat

A look at above facts show that any abrupt decision to privatise the national carrier is best avoided. Instead, waiting till the recovery is consistent and visible could be a win-win for both Air India and the state.

KEY TAKEAWAYS

  • Improved operational performance
  • Operating loss reduced to Rs2,636.19 crore in FY15
  • Aircraft availability, more aggressive marketing
  • Low ATF reducing costs
  • Plays an important role in crises

As part of the turnaround strategy for Air India, a number of steps have been initiated to cut costs and losses. The airline has also been improving its operational and financial performance.

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