The two largest private players in Indian aviation, Jet Airways and Kingfisher, have become unlikely bedfellows in a bid to stem haemorrhaging cash flows. The Federation of Indian Airlines has now approached the government for a $1 billion bailout package.
The turmoil in the private sector should not make us forget the mess the state-run airline finds itself in. The flag carrier Air India has also approached the government for a substantial lifeline. Reports indicate the carrier is looking for one-third of a billion dollars in fresh capital and an equal amount in working capital loans. However, attempts by Raghu Menon, the chairman and managing director of the National Aviation Co. of India, to shed 15,000 employees through an unpaid leave scheme seems to have been scuttled by the government.
While minister for civil aviation Praful Patel seems intent on setting things right with the state airline, a pertinent question has been overlooked: Does India need a state-run airline in the first place?
State enterprises are expected to justify their existence by helping do a few things: meet social obligation, protect national security, prevent market inefficiencies and even, on the rare occasion, turn a profit.
It is doubtful if the Air India-Indian combine currently performs any of those functions. Whenever thrown into competition with private players, the state-run airline has consistently lost business—Jet Airways took just 10 years to overtake 40-year-old Indian Airlines in domestic market share. And its service performance has been nothing to write home about either. Everyone from stand-up comedian Russell Peters to that remarkably astute vehicle of social commentary, The Simpsons television show, has generated laughs at the expense of our state airline.
With private players struggling to make money, it is reasonable to assume that neither will Air India. Perhaps Patel would do well to re-evaluate the need for a state enterprise in a business that is only meant for those with deep pockets. If an outright phasing out of Air India sounds too drastic, perhaps re-jigging the whole business along the lines of the more efficient low-cost Air India Express model might be a more popular compromise.
Does India really need a state-run airline anymore? Tell us, at views@livemint.com