Government steps in to keep Air India flying

NEW DELHI: The civil aviation ministry on Monday night stepped in to avert the possibility of a suspension of operations by Air India, after the national carrier decided not to accept fresh bookings for the next 15 days.

The decision to stop bookings was taken after two rounds of talks failed to end a strike by pilots that disrupted services for the third day on Monday. The airline cancelled 40 flights on Monday. The ministry asked the airline management to enter into dialogue with all sections of employees to end the impasse.

���Bookings will not be taken for the next 15 days,��� said an official in Air India���s corporate communications department. However, the airline continued to accept bookings through its website.

The situation was aggravated with pilots of Air India, who were spared the cut in perks that sparked the agitation, too joining the strike on Monday by reporting sick. In a late night statement, Air India said the management was deliberating various options to deal with the strike. Civil aviation secretary MM Nambiar ruled out the possibility of a lock-out at the national carrier.

Air India CMD Arvind Jadhav met pilots here on Monday to discuss their concerns on the proposed PLI cut.
The first round of talks happened in a tense environment, said an official familiar with the negotiations. ���While pilots insisted on a roll-back of productivity linked incentives of 7,000 employees including executive pilots with erstwhile Indian Airlines and payment of arrears, the management remained non-committal on reinstating part of the salary,��� he said, requesting anonymity.

Executive pilots, with more than 15 years of service, in the airline have been reporting sick to protest the cut in incentives by up to 50%. ���The CMD had on Sunday asked all executive directors to prepare a contingency plan and submit a preparedness report in case other sections of employees such as engineers go on strike,��� said an executive director who was part of the meeting.



As part of its cost-cutting exercise to tide over the worst financial crisis in its history, Air India had earlier proposed to cut PLI of all its 31,000 employees. The airline last week decide to cut incentives of 7,000 staff by 25-50%.

Air India, which reported a cumulative loss of Rs 7,500 crore as on March 2009, has sought an equity infusion of Rs 5,000 crore from the government to continue its operations. In the past three years, the profitability of the company slumped even as its working capital liability multiplied to over Rs 16,000 crore. During these years, Air India also lost its market share to private carriers.

Facts and figures:

Cumulative loss of National Aviation Company of India (NACIL) as on March 2009: Rs 7,500 crore

Working capital liabilities has quadrupled to over Rs 16,000 crore from Rs 4,370 crore in March 2007

Fund requirement: Rs 25,000 crore

Principal and interest repayment over next three years: Rs 9,000 crore

Market share of Air India in August 2008: 18%

Market share in August 2009: 16.6%

Passengers carried by airline during January-August 2009: 47.74 lakh

Passengers carried in January-August 2008: 44.89 lakh

Financial assistance sought from government : Rs 5,000 crore