Mumbai: In a bid to help the distressed national carrier, the finance ministry has said in a note on 13 July that all government officials will now have to travel only by Air India.
This is a change from the government’s travel policy of at least three years that allowed officials to travel by private carriers as well.
Air India, run by National Aviation Co. of India Ltd, is expected to post a loss of around Rs5,000 crore in the year ended 31 March.
Desperate move: Praful Patel had said the carrier needs a Rs4,500 cr bailout package. Harikrishna Katragadda / Mint
The note, signed by deputy secretary Y.P. Sehgal of the finance ministry, said for travel to places not serviced by Air India, officials will have to fly to the nearest destination serviced by the airline firm and then could switch to another carrrier, which should preferably be an alliance partner of the troubled firm.
“This is a conscious decision taken by the government and it comes into effect immediately,” Sehgal told Mint. Air India is in the process of joining the largest operating grouping of global carriers called the Star Alliance, which has as members US Airways Inc, Deutsche Lufthansa AG, Singapore Airlines and South African Airways.
“The overall travel budget of the government is estimated approximately at Rs1,000 crore,” said Kapil Kaul, chief executive, Indian sub-continent and Middle East, Centre for Asia Pacific Aviation, an aviation consulting firm. “However, Air India’s problem is so deep and strategic that these measures alone cannot save the airline.” Kaul said that this would have impact on private carriers, such as Jet Airways (India) Ltd and Kingfisher Airlines Ltd, as many government officials who used to travel business and first class in these airlines will no longer do so.
“It will not make much of the difference (to us) when we shift towards Air India as the bills are paid by the government,” an official at a state-owned financial institution said on condition of anonymity. “But certainly, private carriers are better in terms of quality of service delivery and attitude.”
On 2 July, civil aviation minister Praful Patel told Parliament that Air India’s borrowings had risen steeply from Rs6,550 crore in November 2007 to Rs15,241 crore in June.
Last week, the minister had said that Air India would need a bailout package of around Rs4,500 crore to bring the cash-strapped carrier out of the financial crisis.