Rohit Sharma

As UPA enters into its second term, a glimpse into its 2009 performance report card shows a mix of good and bad. PM Manmohan Singh in his Press Meet covered almost all topics- from defending floating corruption in his telecom department to the insignificant one like Rahul Gandhi’s imminent inclusion in the Cabinet. But what he missed or merely dodged was an explanation on the ugly blotch the year 2009 left on his aviation records.

The Civil Aviation Minister Praful Patel Round-II began with turbulence in the air. Global recession had hit hard the world aviation industry and airlines in India were not spared too. In 2009, IATA (International Air Transport Association) projected a loss of around US$ 9 billion for the Indian aviation industry. The struggle for survival arose as debts and losses on the industry were piling on, pushing the airlines to self-impose some cost cutting methods and changes. Recession brought on some changes in the industry that included deferring aircraft deliveries, cancellation of orders, rationalizing routes and trimming staff to stay away from any financial collapse. Two of India’s three premiere airlines- Jet Airways and Kingfisher Airlines - suffered the most for not being one of the government’s beneficiaries. Jet had to cut down on business class fares 30-35 per cent lower than the standard fares and offered special fares for international routes as it continued to writhe under a colossal debt of Rs 138 billion.

Ostentatious Kingfisher airlines didn’t exactly rejoice in good times last year and offered a fare cut for up to 60 per cent to stay afloat as it posted a loss of Rs 16 billion in 2009-2010. The ailing carrier, which had on its head Rs 74 billion debt riding at the end of December, has been trying to raise up to US$350 million of fresh equity capital for the past year.

Reeling under pressures, Kingfisher and Jet joined hands together with low frill companies IndiGo and SpiceJet and requested the govt for a-Rs 100 billion-bailout package in the form of lower sales tax on aviation turbine fuel (ATF) and lower airport taxes. The demands were outrightly rejected for the reason that savings were actually needed for a much bigger crisis and embarrassment for the govt called Air India (AI).

In 2008-2009, AI suffered a loss of Rs 55 billion which piled on to the total loss of Rs 72 billion, along with a massive debt of Rs 160 billion, on its books. Praful Patel came under scathing criticism for mishandling the national carrier’s business and messing up AI-IA merger, so much so, Prime Minister Manmohan Singh had to step in. As Singh reviewed Maharaja’s condition, he was subsequently handed the resuscitation requirement of Rs 150 billion for the breathless AI. The bailout has now been negotiated down to Rs 8 billion.

Air India, on its part, has agreed to a cost reduction plan of Rs 19 billion through fleet reduction and route rationalization in the current financial year. Interestingly, the airline has 31,000 employees, whereas, Jet and Kingfisher, which are almost of the same size in terms of fleet strength and network, have nearly 13,000 employees. Cost cutting plans like PLI (performance linked incentive) cuts and late salaries have not helped the airline either but instead launched strikes and strike threats from its employee unions.

The recent developments in aviation industry indicate the clearing of the skies for Indian airlines. According to DGCA, the domestic traffic from January to April 2010 grew by 22 per cent as compared to last year (domestic airlines flew 163 lakh passengers). Jet Airways has reported a surge in profit this quarter and more than 81 per cent passenger load in its international flights and 73 per cent in domestic flights. Kingfisher has also made a foray into the international market and has launched operations on eight international routes recently.

The airlines are not entirely out of troubled waters yet but will at least see black returning to their balance sheets.

However, only airlines didn’t alone add to UPA 2’s migraine. Airports modernization plan that got kicked off in 2006 is still under process. The revised estimates for the same, made in March this year, suggest that the modernization costs for Delhi and Mumbai airports are all set to almost double to nearly Rs 200 billion. The cost for Kolkata airport modernization has also gone up by around 20 per cent. The deadlines are merely being pushed, whereas, work for tier-2 airports is moving at a much sluggish pace.

The Aviation Minister got embroiled in the IPL controversy where his daughter was accused of diverting an aircraft from a scheduled passenger flight for ferrying her and some IPL cricketers.

All the UPA-2 aviation force was spent into covering for its carrier’s deep losses and struggles with private aviation players. With the recent air tragedy in Mangalore, questions are now being raised about the air safety- whether the airlines are complying with safety norms and how serious the govt is regarding it. Patel offered his resignation a few hours after the tragedy which was rejected by the PM. Once again, the garb of “moral responsibility” helped UPA dodge the real questions. The time, money and energy spent on aviation in India need to be reexamined and those proving incompetent need to just fly away.

Indiabiznews