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anshabhi
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Indian govt wants to exit AI

Mon May 29, 2017 4:18 am

This is the first clear comment from the government about the future of AirIndia."Today they have a market share of 14% and a debt of Rs 50,000 crore. ($7.8 billion). Your money does not go into private sector airlines such as Indigo, Spicejet,Go Air, Jet Airways then why should you put Rs 50,000 crore in running Air India? Government money means yourmoney. This money can be used for education," Jaitley said during a panel discussion on Doordarshan News.When asked about the government's strategy to deal Air India, the finance minister said that if a good management comes forward, government will considerdisinvestment. Jaitley explained that of Rs 50,000 crore debt, nearly Rs 25,000 crore is the value of aircraft. The airline also has some other assets. The civil aviation ministry is exploring all options. "If 86% of the flying can be handled by the private sector they can handle 100% also," Jaitley said.

http://m.timesofindia.com/business/indi ... 875704.cms

Needless to say, no one has shown any interest in investing yet...
 
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unrave
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Re: Indian govt wants to exit AI

Mon May 29, 2017 5:27 am

20 years late.
17April2019: RIP Jet Airways
 
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Spiderguy252
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Re: Indian govt wants to exit AI

Mon May 29, 2017 5:49 am

unrave wrote:
20 years late.


Prattled out every year for the last 20 years, rather.

Believe it when you see it.
Vahroone
 
TigerFlyer
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Re: Indian govt wants to exit AI

Mon May 29, 2017 6:33 am

Encouraging and long past due. A bloated state run carrier cannot succeed and is dragging down better run market-based carriers by their heels. It will be painful, but many employees, aircraft, and infrastructure would be reabsorbed by other national carriers.
 
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LAX772LR
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Re: Indian govt wants to exit AI

Mon May 29, 2017 6:57 am

Spiderguy252 wrote:
Believe it when you see it.

This.

Talk is cheap.
I myself, suspect a more prosaic motive... ~Thranduil
 
dtw2hyd
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Re: Indian govt wants to exit AI

Mon May 29, 2017 12:13 pm

They cannot. Tax payers have to payoff the debt in any case, unless proposed India's bankruptcy laws allow state owned entities to file for bankruptcy and wipe off the debt.

$750 Million av assets - $4 Billion aircraft related debt(may include lease commitments)
Employees(if one considers them as asset) - $4 Billion working capitol loans.
$2-$3 Billion Real Estate - Not able to monetize.

For starters don't add $480 Million($160M x 3) more debt next year for VVIP aircraft to take planes worth $240Million ($80M x 3)

Best option is go Malaysia's Khazana route. Transfer all assets and liabilities to a public sector bank. Airline leases planes from that bank, pays salaries and op costs.

$1B equity infusion in 2009 per auditor recommendation would have changed the course, but both political parties ignored, now GoI is now high leveraged and rating agencies are breathing on their neck. Now they are "talking" again about AI.

Few other examples of GoI splurging

$5 Billion/year subsidy to Indian Railways
$16 Billion for 300 mile high-speed railway
$3 Billion for two statues middle of ocean
$9 Billion for 36 Rafales
All posts are just opinions.
 
VTORD
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Re: Indian govt wants to exit AI

Mon May 29, 2017 1:05 pm

Spiderguy252 wrote:
Believe it when you see it.


:checkmark:

dtw2hyd wrote:

Few other examples of GoI splurging

$16 Billion for 300 mile high-speed railway
$3 Billion for two statues middle of ocean
$9 Billion for 36 Rafales


What!? How dare you call Dear Leader's projects splurging? What's $1.5 billion on a statue when we've got only like the international airport, a few buildings and every other bridge named after him?
 
vadodara
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Re: Indian govt wants to exit AI

Mon May 29, 2017 11:40 pm

Govt. needs to figure out how to unload 75% of the workforce. Perhaps, rationalize some routes. And so on.

Having done that, it might be worth an IPO. Sell it cheap to public; i would be returning public money back to public.
 
goacom
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Re: Indian govt wants to exit AI

Tue May 30, 2017 3:36 am

The $ 3Billion is funded by private sources, not the government, but yes, it is a terrible waste of resources in a nation like India.
The $9 billion deal for the Rafales was much needed, though one can argue if it was money well spent on such a limited number of fighters.
The $16 billion for the high speed rail corridor may be another high cost white elephant - kind of like Air India on the ground!
The $5 billion subsidy for the Indian railways should also be eliminated, but considering that it carries as many passengers in a week as ALL airlines carry in a year (both, domestic and international!) it is relatively a drop in the bucket.

dtw2hyd wrote:

$5 Billion/year subsidy to Indian Railways
$16 Billion for 300 mile high-speed railway
$3 Billion for two statues middle of ocean
$9 Billion for 36 Rafales
 
anshabhi
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Re: Indian govt wants to exit AI

Wed May 31, 2017 1:38 am

BREAKING NEWS

INDIAN GOVT is ready to write off upto ₹30,000 crore ($4.6 billion) of debt

http://m.timesofindia.com/business/indi ... 920007.cms

In insider circles, there's some buzz about Qatar cancelling its Indian startup plans and govt putting AI on sale.
 
Nimish
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Re: Indian govt wants to exit AI

Thu Jun 01, 2017 1:13 pm

From: http://timesofindia.indiatimes.com/busi ... 939026.cms
Finance minister Arun Jaitley and Niti Aayog may be in favour of disinvesting in loss-ridden Air India, but finding a "bakra", or a strategic investor, may not be easy, civil aviation minister Ashok Gajapathi Raju said on Wednesday. "There are hardly any bakras around, so to get one is difficult and businessmen are businessmen"


What a brilliant quote - and so rare to find such honesty. For those not familiar with "Bakra" - it's literally the goat that is sacrificed - the scape-goat. So the current owner of AI concedes that any future buyer/ owner of AI is likely to end up like a slaughtered goat - on the table for someone's meal!

With this level of confidence - I doubt that AI/ GoI are actually ever going to find a buyer or know how to deal with AI.
Incredible India!
 
dtw2hyd
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Re: Indian govt wants to exit AI

Thu Jun 01, 2017 1:34 pm

So India has $4.6 Billion to spare cash ? That is 3 more statues in some ocean (or) 18 Rafales (or) 150 Mile high-speed rail.

Why not bailout VM, and revive KF it costs only $2.5 Billion, and their FAs are hot.

How about $4B to NG. He could use to release lien on his shares.

Even though India claims it is fiscally very responsible, all three rating agencies think its GDP to debt ratio is very high.
All posts are just opinions.
 
ec99
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Re: Indian govt wants to exit AI

Thu Jun 01, 2017 2:08 pm

This title could also read "Indian govt considering letter AI collapse." The idea that AI is going to be able to stand on its own two feet within the next decade is far fetched. AI is a lot like AZ, a government supported airline (granted AZ is also supported by Abu Dhabi government) that has too many employees, too few passengers and not enough revenue.

To make AI work, you would need massive layoffs, the kind of which the unions would never agree to. You would then need the existing employees to work much harder. It is fairly similar to the AZ situation in that the employees have to agree to make huge sacrifices including large scale layoffs in order for some of them to keep their jobs. Few will be willing to do so because they believe they can refuse, the government will keep bailing them out and the status quo will persist.

My prediction is AI keeps limping on till some economic depression occurs and, in the middle of this depression, the government cannot justify a large cash infusion to keep AI afloat.
 
dtw2hyd
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Re: Indian govt wants to exit AI

Thu Jun 01, 2017 4:54 pm

Nimish wrote:
From: http://timesofindia.indiatimes.com/busi ... 939026.cms
Finance minister Arun Jaitley and Niti Aayog may be in favour of disinvesting in loss-ridden Air India, but finding a "bakra", or a strategic investor, may not be easy, civil aviation minister Ashok Gajapathi Raju said on Wednesday. "There are hardly any bakras around, so to get one is difficult and businessmen are businessmen"


What a brilliant quote - and so rare to find such honesty. For those not familiar with "Bakra" - it's literally the goat that is sacrificed - the scape-goat. So the current owner of AI concedes that any future buyer/ owner of AI is likely to end up like a slaughtered goat - on the table for someone's meal!

With this level of confidence - I doubt that AI/ GoI are actually ever going to find a buyer or know how to deal with AI.


Arun Jaitley is a slick attorney and Ashok Gajapathi Raju is a honorable person.
All posts are just opinions.
 
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lightsaber
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Re: Indian govt wants to exit AI

Thu Jun 01, 2017 7:15 pm

anshabhi wrote:
BREAKING NEWS

INDIAN GOVT is ready to write off upto ₹30,000 crore ($4.6 billion) of debt

http://m.timesofindia.com/business/indi ... 920007.cms

In insider circles, there's some buzz about Qatar cancelling its Indian startup plans and govt putting AI on sale.

I wonder if QR will notice how well reform at Alitalia went.

If AI is to be bought, it should be conditional on certain reform happening prior to the handover payments.
I cannot wait to get vaccinated to live again! Warning: I simulated that it takes 50%+ vaccinated to protect the vaccinated and 75%+ vaccinated to protect the vac-hesitant.
 
dtw2hyd
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Re: Indian govt wants to exit AI

Thu Jun 01, 2017 7:53 pm

Civil Aviation Minister clearly stated QR investment has nothing to do with AI privatization. He also laughed at Aviation Minister of State Jayant Sinha's statement "Government has five pronged winning strategy to revive Air India"

http://www.moneycontrol.com/news/busine ... 93191.html
All posts are just opinions.
 
Planesmart
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Re: Indian govt wants to exit AI

Thu Jun 01, 2017 8:15 pm

unrave wrote:
20 years late.

About 20 years ago, I was invited to join a team with an international firm of accountants, preparing an Air India divestment plan.

Initial research was undertaken outside India, where impediments to divestment, and sweeteners required to attract investment were identified, and ideas/options to overcome these were ranked and costed.

A general election got in the way of planned research in India.

Incomplete research suggested private ownership models would require the Government to forgive / write off debt, guarantee remaining existing funding and leases, re-confirm special deals and protection (ultimately anti-competitive), pay an employment subsidy, cherry pick out loss making services for ongoing subsidies, and relax foreign ownership and currency movement rules.

As others have mentioned, you reach a point where it's cheaper to let the private sector grow, and focus on a controlled exit, but that would span multiple Governments.
 
devmapper
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Re: Indian govt wants to exit AI

Thu Jun 01, 2017 9:29 pm

ec99 wrote:
This title could also read "Indian govt considering letter AI collapse." The idea that AI is going to be able to stand on its own two feet within the next decade is far fetched. AI is a lot like AZ, a government supported airline (granted AZ is also supported by Abu Dhabi government) that has too many employees, too few passengers and not enough revenue.

To make AI work, you would need massive layoffs, the kind of which the unions would never agree to. You would then need the existing employees to work much harder. It is fairly similar to the AZ situation in that the employees have to agree to make huge sacrifices including large scale layoffs in order for some of them to keep their jobs. Few will be willing to do so because they believe they can refuse, the government will keep bailing them out and the status quo will persist.

My prediction is AI keeps limping on till some economic depression occurs and, in the middle of this depression, the government cannot justify a large cash infusion to keep AI afloat.

If I remember correctly, AI no longer has any significant number of employees. Ground handling and maintenance work has already been spun out as subsidiary companies, and there has been some comment in India about how AI managed to get its employee-to-aircraft ration down significantly.

While the previous administration managed to sell 5 ULH aircraft to EY with some alacrity, I haven't seen any progress being made on selling off AI's land holdings and the ground handling and maintenance subsidiaries, which were crucial pieces to the turnaround plan.
 
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lightsaber
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Re: Indian govt wants to exit AI

Fri Jun 02, 2017 2:03 am

Is there likely to be any bidder? I wouldn't want to be responsible for turning around AI. From what I can tell, they moved quite a bit of operating expenses onto non-operating, so they need further work than many here want to believe.

Out of curiosity, how much of the funding of AI, including guarantees for its debt, is part of the credit rating of India?

Lightsaber
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ec99
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Re: Indian govt wants to exit AI

Fri Jun 02, 2017 3:07 am

devmapper wrote:
ec99 wrote:
This title could also .


If I remember correctly, AI no longer has any significant number of employees. Ground handling and maintenance work has already been spun out as subsidiary companies, and there has been some comment in India about how AI managed to get its employee-to-aircraft ration down significantly.

While the previous administration managed to sell 5 ULH aircraft to EY with some alacrity, I haven't seen any progress being made on selling off AI's land holdings and the ground handling and maintenance subsidiaries, which were crucial pieces to the turnaround plan.


It's of course about Impossible to look at employee to aircraft numbers and passengers flown since every airline has different outsourcing contracts and flies different types of routes. But for comparison sake, let's look at 9W. They are Indian, full service and fly international routes. They have about 25% less employees, about the same fleet size and fly about 20% more passengers. The numbers are much worse comparing them to other competition like EK.
 
anshabhi
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Re: Indian govt wants to exit AI

Fri Jun 02, 2017 3:41 am

lightsaber wrote:
Is there likely to be any bidder? I wouldn't want to be responsible for turning around AI. From what I can tell, they moved quite a bit of operating expenses onto non-operating, so they need further work than many here want to believe.

Out of curiosity, how much of the funding of AI, including guarantees for its debt, is part of the credit rating of India?

Lightsaber


India's total external debt is about $450 billion. AI's debt from external sources should be less than $4 billion.
 
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BawliBooch
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Re: Indian govt wants to exit AI

Fri Jun 02, 2017 5:55 am

dtw2hyd wrote:
They cannot. Tax payers have to payoff the debt in any case, unless proposed India's bankruptcy laws allow state owned entities to file for bankruptcy and wipe off the debt.


Exactly. But this spiel will be trotted out to the faithful to make it look it like taxpayer is SAVING 50000 crores by selling of AI assets for cheap to some crony.

I am particularly struck by the choice of words like "bakra" by some ministers in the Govt. To you talk down an asset you are trying to sell? Unless you are trying to drive down the price?

The last time this happened was in NDA1 when VSNL et-al were sold off to cronies for a pittance.
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dtw2hyd
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Re: Indian govt wants to exit AI

Fri Jun 02, 2017 10:41 am

BawliBooch wrote:
I am particularly struck by the choice of words like "bakra" by some ministers in the Govt. To you talk down an asset you are trying to sell? Unless you are trying to drive down the price?.


Unlike the attorney Jaitley and cheerleader Sinha, he is not BJP, he is from one of the alliance parties getting screwed by BJP economics. If Modi wants to fire him for saying that, he and his party will be very happy. They need a reason to break away from this alliance.

AFAIK, less than $50 Million of AI's debt is sovereign guaranteed. Ie.,B787 SLB transaction for a maximum total of $5 Million lease rental + lease return condition penalties on last few transactions. GoI never guaranteed bridge loans.
All posts are just opinions.
 
dtw2hyd
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Re: Indian govt wants to exit AI

Fri Jun 02, 2017 10:43 am

ec99 wrote:
It's of course about Impossible to look at employee to aircraft numbers and passengers flown since every airline has different outsourcing contracts and flies different types of routes. But for comparison sake, let's look at 9W. They are Indian, full service and fly international routes. They have about 25% less employees, about the same fleet size and fly about 20% more passengers. The numbers are much worse comparing them to other competition like EK.


Please read other threads or do your own research. Don't just type false information.
All posts are just opinions.
 
ec99
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Re: Indian govt wants to exit AI

Fri Jun 02, 2017 12:56 pm

[/quote] Please read other threads or do your own research. Don't just type false information.[/quote]

I did my research on wiki but I also checked the sources like Jet Airways annual reports. Can you explain why the numbers I cited were wrong? If you can't trust airlines annual reports for such facts then it becomes about impossible to have any sort of reasonable conversation. Granted, I do not know if the annual reports in India are of the same reliability as those in the EU and USA. But again, if we cant rely on them then we basically have no information to go on.

Keeping in mind AI may have made improvements, but if the improvements in reducing the number of employees to planes or employees to passengers flown only moved AI from a very bad situation to a bad situation, this still would not solve the problem.

Finally, I am not really sure what you are suggesting is wrong with AI? Do you believe it is just the government interference that is causing AI to struggle?
 
vadodara
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Re: Indian govt wants to exit AI

Fri Jun 02, 2017 3:28 pm

Planesmart wrote:
unrave wrote:
20 years late.

About 20 years ago, I was invited to join a team with an international firm of accountants, preparing an Air India divestment plan.
...........
Incomplete research suggested private ownership models would require the Government to forgive / write off debt, guarantee remaining existing funding and leases, re-confirm special deals and protection (ultimately anti-competitive), pay an employment subsidy, cherry pick out loss making services for ongoing subsidies, and relax foreign ownership and currency movement rules.

As others have mentioned, you reach a point where it's cheaper to let the private sector grow, and focus on a controlled exit, but that would span multiple Governments.


Thanks for sharing! Explains the reason why no govt. wants to 'touch' Air India. It would be too much of a distraction.

At 14% market share, and rapidly declining, it has reached the point where govt. can put it under bankruptcy. Of course, that law still needs to be passed. My sense is that this is a primer, i.e. the minister publicly stating you need a 'bakra' to buy this, to justify sending AI under the hammer.

Here, each entity can be sold of piece meal. People have mentioned real-estate holdings; add to it, engineering, ground handling and so forth. One asset no one has mentioned, which I think is the only valuable asset, would be BOM slots. If AI is busy building DEL 'hub', other airlines should have a fair shot at acquiring slots at BOM which presumably AI does not need.
 
dtw2hyd
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Re: Indian govt wants to exit AI

Fri Jun 02, 2017 4:37 pm

ec99 wrote:
Finally, I am not really sure what you are suggesting is wrong with AI? Do you believe it is just the government interference that is causing AI to struggle?


The answer is in the Thinktank's recommendation.

Ball park numbers on AI debt, don't nitpick. AV-Aviation related, WC -Working Capital

Total Debt $8 Billion
Annual Revenue - $3.2 Billion
Annual debt service cost $700 Million
Annual staff cost (including retirees) $320 Million

Debt Structure
AV debt - $4 Billion (Global including lease obligations) 3%-5%
WC debt Global Sources - $1 Billion 3%-5%
WC debt Indian Banks - $3 Billion 13%-19%

It is the Indian Public Sector Banks bleeding AI to death by charging heavy interest rates. These are government owned banks
Thinktank is suggesting, write off $3B 13%-19% rate debt plus $1B av debt.

There is absolutely no need to that other than helping friends in private sector. GoI could ask Indian Banks to reduce the rate. No need to give bailout money and take it back as interest payments.

There are several threads about staff levels.
All posts are just opinions.
 
vadodara
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Re: Indian govt wants to exit AI

Fri Jun 02, 2017 5:03 pm

dtw2hyd wrote:
ec99 wrote:
Finally, I am not really sure what you are suggesting is wrong with AI? Do you believe it is just the government interference that is causing AI to struggle?


It is the Indian Public Sector Banks bleeding AI to death by charging heavy interest rates. These are government owned banks
Thinktank is suggesting, write off $3B 13%-19% rate debt plus $1B av debt.

There is absolutely no need to that other than helping friends in private sector. GoI could ask Indian Banks to reduce the rate. No need to give bailout money and take it back as interest payments.

There are several threads about staff levels.


Hmmm! Given a choice, no bank would lend to a company like Air India. The banks were probably 'forced' to lend to a public sector enterprise that was performing 'social' work.

Beginning of the problem called Air India (or Indian Railways or Hindustan Machine Tools and on and on).
 
dtw2hyd
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Re: Indian govt wants to exit AI

Fri Jun 02, 2017 5:15 pm

vadodara wrote:
Hmmm! Given a choice, no bank would lend to a company like Air India. The banks were probably 'forced' to lend to a public sector enterprise that was performing 'social' work.


No one forced global banks, yet they hold the majority of the debt at very low rates. With the exception of 2xB788s, the entire fleet of 140 planes is from global financiers/lessors.

RBI limit on external WC debt forces AI to borrow from Indian banks. It could save $300 Million /year by just refinancing $3B WC debt.
All posts are just opinions.
 
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lightsaber
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Re: Indian govt wants to exit AI

Fri Jun 02, 2017 5:17 pm

dtw2hyd wrote:
ec99 wrote:
Finally, I am not really sure what you are suggesting is wrong with AI? Do you believe it is just the government interference that is causing AI to struggle?


The answer is in the Thinktank's recommendation.

Ball park numbers on AI debt, don't nitpick. AV-Aviation related, WC -Working Capital

Total Debt $8 Billion
Annual Revenue - $3.2 Billion
Annual debt service cost $700 Million
Annual staff cost (including retirees) $320 Million

Debt Structure
AV debt - $4 Billion (Global including lease obligations) 3%-5%
WC debt Global Sources - $1 Billion 3%-5%
WC debt Indian Banks - $3 Billion 13%-19%

It is the Indian Public Sector Banks bleeding AI to death by charging heavy interest rates. These are government owned banks
Thinktank is suggesting, write off $3B 13%-19% rate debt plus $1B av debt.

There is absolutely no need to that other than helping friends in private sector. GoI could ask Indian Banks to reduce the rate. No need to give bailout money and take it back as interest payments.

There are several threads about staff levels.

Any which way, the GoI needs to cut the cord. The GoI needs to invest in education, transportation, and health care. Why are they putting money into a sector well supplied,86% and growing, by the private sector.

AI is too Tangled to save in the corruption, some of which you note.

What metrics drive the operation of AI? I cannot figure out one. For their tiny market share, why do they have so many aircraft?

Seriously, every well run airline has their metrics in pretty charts in the annual report with a statement on how the will improve each metric going forward. FR, U2, WN, DL, AA, and EK all publish easy to understand metrics. I've not once seen a series of AI charts to show their improvement.

There is a global surplus of narrowbody and widebody aircraft. So if AI ceases operations, India:
1. Only losses a slice of service.
2. Other airlines could buy used aircraft quickly to feed demand
3. Those huge new aircraft backlogs would be put to great use.

Opaque companies are never well run. Only privatization will make AI well run. Alas, I have to agree with others, I think it is time to cut the costs and allow the bankruptcy. If Air India finds a buyer and thrives, that would be best. If not... No long term problem.

Lightsaber
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devmapper
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Re: Indian govt wants to exit AI

Fri Jun 02, 2017 5:41 pm

vadodara wrote:
At 14% market share, and rapidly declining, it has reached the point where govt. can put it under bankruptcy. Of course, that law still needs to be passed. My sense is that this is a primer, i.e. the minister publicly stating you need a 'bakra' to buy this, to justify sending AI under the hammer.

Here, each entity can be sold of piece meal. People have mentioned real-estate holdings; add to it, engineering, ground handling and so forth. One asset no one has mentioned, which I think is the only valuable asset, would be BOM slots. If AI is busy building DEL 'hub', other airlines should have a fair shot at acquiring slots at BOM which presumably AI does not need.

AI is not a domestic carrier, despite all the hand wringing about AIs falling market share. It is predominantly an international carrier with a domestic component feeding into its international operations. Of course, there are the BOM-DEL hourly shuttles, and the equivalent of Essential Air Services (UDAN and service to smaller destinations that private carriers cannot profitably operate). In that context AIs domestic market share is perhaps understandable.

I think a piecemeal sell-off was originally planned, but there have been opposition from the unions to selling off the ground handling and maintenance subsidiaries. Surprisingly, the property sell-off also has been a bust.
 
VTORD
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Re: Indian govt wants to exit AI

Fri Jun 02, 2017 5:45 pm

lightsaber wrote:

For their tiny market share, why do they have so many aircraft?


Isn't that the question where all the trouble started!? Initial order in 2005 was to be for 28 aircraft. Then MoCA comes in and changes it to 110. There is no logic to it except a politician's ego.
 
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lightsaber
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Re: Indian govt wants to exit AI

Fri Jun 02, 2017 5:53 pm

anshabhi wrote:
lightsaber wrote:
Is there likely to be any bidder? I wouldn't want to be responsible for turning around AI. From what I can tell, they moved quite a bit of operating expenses onto non-operating, so they need further work than many here want to believe.

Out of curiosity, how much of the funding of AI, including guarantees for its debt, is part of the credit rating of India?

Lightsaber


India's total external debt is about $450 billion. AI's debt from external sources should be less than $4 billion.

What about the subsidies? There are many billions of dollars missing from your sum.

I'd like to know the total cost, not some arbitrarily reduced figure. Add subsidies, lack of competition for government fares at inflated prices, preventing competition from timely launch of routes, not expanding bilaterals when other Indian airlines need an expansion.

For example, the UAE bilateral. It is obvious that Abu Dhabi is never going to allow their seats to be transferred to Dubai. So by avoiding signing an expansion, AI's fares are preserved from a 6E expansion. For it is a bilateral an the entity with veto power is not being offered what they want.

Lightsaber
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P1aneMad
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Re: Indian govt wants to exit AI

Fri Jun 02, 2017 5:54 pm

I think that if India's successive governments were investing all these untold billions instead of AI on the construction of public toilets, sewage networks and waste treatment facilities it would have benefited a whole lot more Indians.
 
VTORD
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Re: Indian govt wants to exit AI

Fri Jun 02, 2017 5:56 pm

devmapper wrote:
Surprisingly, the property sell-off also has been a bust.


I think that depends on what properties they are selling. I would assume that most of AI's properties are in prime locations which would cost several hundred crores on the market. For eg., the Air India building in Nariman Point is smack in the middle of some of the highest property rates in the country. Not sure who exactly lives in AI Colony (is it just a name or it's an actual housing for AI employees) in Kalina but that too is some very expensive suburban areas. I wonder if any one who acquires them doesn't feel they will be able to recoup the costs!
 
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lightsaber
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Re: Indian govt wants to exit AI

Fri Jun 02, 2017 5:57 pm

devmapper wrote:
vadodara wrote:
At 14% market share, and rapidly declining, it has reached the point where govt. can put it under bankruptcy. Of course, that law still needs to be passed. My sense is that this is a primer, i.e. the minister publicly stating you need a 'bakra' to buy this, to justify sending AI under the hammer.

Here, each entity can be sold of piece meal. People have mentioned real-estate holdings; add to it, engineering, ground handling and so forth. One asset no one has mentioned, which I think is the only valuable asset, would be BOM slots. If AI is busy building DEL 'hub', other airlines should have a fair shot at acquiring slots at BOM which presumably AI does not need.

AI is not a domestic carrier, despite all the hand wringing about AIs falling market share. It is predominantly an international carrier with a domestic component feeding into its international operations. Of course, there are the BOM-DEL hourly shuttles, and the equivalent of Essential Air Services (UDAN and service to smaller destinations that private carriers cannot profitably operate). In that context AIs domestic market share is perhaps understandable.

I think a piecemeal sell-off was originally planned, but there have been opposition from the unions to selling off the ground handling and maintenance subsidiaries. Surprisingly, the property sell-off also has been a bust.

73 of 115 aircraft at Air India are narrowbodies. How can the be primarily an international carrier anymore? A decade+ past the merger it is time to let it go and treat both sides as one.

AI depends on domestic connections for international, so there really isn't any separation potential.

Lightsaber
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VTORD
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Re: Indian govt wants to exit AI

Fri Jun 02, 2017 6:11 pm

lightsaber wrote:
73 of 115 aircraft at Air India are narrowbodies. How can the be primarily an international carrier anymore? A decade+ past the merger it is time to let it go and treat both sides as one.

AI depends on domestic connections for international, so there really isn't any separation potential.

Lightsaber


A significant number of AI's international destinations are on NBs: KWI, MLE, CMB, YGN, RUH, DXB, SHJ, MCT to name a few.....so I don't think anyone is treating them as AI/IC any more. Even pre-merger, before the infamous EK ASA seat increase, both AI and IC separately used to operate the same routes internationally especially to the Gulf.
 
dtw2hyd
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Re: Indian govt wants to exit AI

Fri Jun 02, 2017 6:27 pm

The domestic market share number is skewed by Indigo deploying one new frame every 9 days. AI stopped adding NB capacity 2006. Its recent deliveries are just replacements.

As 6E continues to add, it will go down even further.

The goal should be to close AI without costing tax payers few more $$$Billions. The proposed plan needs $4 Billion immediately and banks lose annual revenue of $450-$500 Million. Few banks will go down with AI.
All posts are just opinions.
 
WPvsMW
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Re: Indian govt wants to exit AI

Fri Jun 02, 2017 6:39 pm

Grammar police: "As 6E continues to add, [AI] will go down even further.
 
devmapper
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Re: Indian govt wants to exit AI

Fri Jun 02, 2017 9:38 pm

lightsaber wrote:
73 of 115 aircraft at Air India are narrowbodies. How can the be primarily an international carrier anymore? A decade+ past the merger it is time to let it go and treat both sides as one.

AI depends on domestic connections for international, so there really isn't any separation potential.

Lightsaber

I am not separating pmAI and pmIC. I am talking about AI continuing to focus on its international network, to the detriment of its domestic network. For example, AI currently has 65 narrow-body aircraft (not counting any ATR). As VTORD and dtw2hyd point out, some of them are put on international routes. 9W has the same number of narrowbodies as AI and has 4% more domestic marketshare as AI. So why is AI the "bakra" (goat) and why isn't 9W subject to the same criticism from a marketshare perspective?

I don't like that the GOI runs an airline, I think AI should have been privatized in 2001. However, A.Net seems to have schizophrenic relationship with AI. AI has a pretty good international network, runs domestic services to largely feed into its international network, and seems to be balancing its books of late. Take away the debt burden that GOIs faulty policies have imposed on AI, and AI would be indistinguishable from the private airlines in India that everybody seems to be so enamored of.
 
dtw2hyd
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Re: Indian govt wants to exit AI

Fri Jun 02, 2017 11:23 pm

devmapper wrote:
... Take away the debt burden that GOIs faulty policies have imposed on AI, and AI would be indistinguishable from the private airlines in India that everybody seems to be so enamored of.


They could have cancelled pending orders in 2011-12.

GoI doesn't need to takeaway AI's debt, just don't add future debt like $480 Million next year for VVIP aircraft, and let global financiers bid on working capital debt.

The additional $300 Million savings will help AI climb out of the hole. But some of those PSU Banks may collapse.

They have prime real estate in Mumbai, LHR slots worth few hundred $$Millions. By shackling entire finances to just PSU banks they are making it look worthless, so they can sell it for pennies to one of their friends.
All posts are just opinions.
 
anshabhi
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Re: Indian govt wants to exit AI

Fri Jun 02, 2017 11:29 pm

lightsaber wrote:

What about the subsidies? There are many billions of dollars missing from your sum.

I'd like to know the total cost, not some arbitrarily reduced figure. Add subsidies, lack of competition for government fares at inflated prices, preventing competition from timely launch of routes, not expanding bilaterals when other Indian airlines need an expansion.

For example, the UAE bilateral. It is obvious that Abu Dhabi is never going to allow their seats to be transferred to Dubai. So by avoiding signing an expansion, AI's fares are preserved from a 6E expansion. For it is a bilateral an the entity with veto power is not being offered what they want.

Lightsaber

AI's turnaround plan of 2012 involved $5 billion fund infusion, over 10 years, which is not a big thing for GoI. I am sure they don't need to borrow from foriegn sources for such a small amount
.India's annual budget is around $340 billion.

Even then if you see, a lot of money remains inside the govt. Taxes, fuel, loan payments- AI pays all of these to various govt entities only.

UAE bilaterals are still a very tricky thing. Its essential to control it to save the entire long haul industry (9W included, and SG,UK too soon). 6E is very eager for Dubai rights, but other than that the demand is not really much.

A more worrying thing is EK has 50,000 weakly seats going to transit traffic, which were meant for bilateral traffic. Developing India's long haul industry is another way to free up these seats.
 
WPvsMW
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Re: Indian govt wants to exit AI

Sat Jun 03, 2017 1:01 am

anshabhi wrote:
A more worrying thing is EK has 50,000 weakly seats going to transit traffic, which were meant for bilateral traffic. Developing India's long haul industry is another way to free up these seats.


Does the ASA for EK under the IN/UAE bilateral actually distinguish between transit and O/D traffic?
 
anshabhi
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Re: Indian govt wants to exit AI

Sat Jun 03, 2017 1:38 am

WPvsMW wrote:
anshabhi wrote:
A more worrying thing is EK has 50,000 weakly seats going to transit traffic, which were meant for bilateral traffic. Developing India's long haul industry is another way to free up these seats.


Does the ASA for EK under the IN/UAE bilateral actually distinguish between transit and O/D traffic?


No.
 
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lightsaber
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Re: Indian govt wants to exit AI

Sat Jun 03, 2017 2:26 am

devmapper wrote:
lightsaber wrote:
73 of 115 aircraft at Air India are narrowbodies. How can the be primarily an international carrier anymore? A decade+ past the merger it is time to let it go and treat both sides as one.

AI depends on domestic connections for international, so there really isn't any separation potential.

Lightsaber

I am not separating pmAI and pmIC. I am talking about AI continuing to focus on its international network, to the detriment of its domestic network. For example, AI currently has 65 narrow-body aircraft (not counting any ATR). As VTORD and dtw2hyd point out, some of them are put on international routes. 9W has the same number of narrowbodies as AI and has 4% more domestic marketshare as AI. So why is AI the "bakra" (goat) and why isn't 9W subject to the same criticism from a marketshare perspective?

I don't like that the GOI runs an airline, I think AI should have been privatized in 2001. However, A.Net seems to have schizophrenic relationship with AI. AI has a pretty good international network, runs domestic services to largely feed into its international network, and seems to be balancing its books of late. Take away the debt burden that GOIs faulty policies have imposed on AI, and AI would be indistinguishable from the private airlines in India that everybody seems to be so enamored of.

Any narrowbody international traffic is in danger of competition from 6E. In particular as the NEO overcomes any range handicap of the high density configuration.

9W has reformed nicely since EY bought into their management. For the same number of aircraft and significantly more market share...

How about we compare metrics
How many hours per day, on average is AI flying their narrowbodies vs. Indigo or 9W?

I disagree on AI being the equivalent of Indigo or SpiceJet operationally. As 9W? Getting close, but no longer the main competition.

What is AI going to do if Indigo goes on a major international expansion? The NEO has far more range in a high density configuration than the CEO. This means quite a few more available routes.

If AI really is comparable, then no worries. But Indigo is accelerating expansion. They should be expanding as they are profitable.

AI is adapting. Just about 5 years too late to matter.

Lightsaber
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goacom
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Re: Indian govt wants to exit AI

Sat Jun 03, 2017 3:25 am

The goal should be to minimize costs to the tax payer. Continued operation of AI would mean continuation of the Air India pyramid scheme of putting good money into this black hole. Basically the best option would be for the GOI to absorb the liabilities and sell what is left to the highest bidder and subject its labor force to the prevailing laws present in the private sector. If there is no buyer, or if the unions are not willing to cooperate, then let it die.

dtw2hyd wrote:

The goal should be to close AI without costing tax payers few more $$$Billions. The proposed plan needs $4 Billion immediately and banks lose annual revenue of $450-$500 Million. Few banks will go down with AI.
 
goacom
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Re: Indian govt wants to exit AI

Sat Jun 03, 2017 3:43 am

Anshabhi's cavalier attitude towards public money demonstrates what is wrong with AI and with those who support wasting tax payer's money on elitist self serving projects like AI. I could definitely use a very tiny fraction of the paltry $5 billion towards the school that my friends and I are helping setup in a remote part of India, thanks to a woefully funded public school in which the teachers never show up. Some people seem to be very generous when it comes to spending other people's money. Absolutely disgusting.
Air India should be renamed Pyramid Air. It is a pyramid scheme that relies on pouring good money into an eternal black hole that has no chance of being paid back.

anshabhi wrote:
AI's turnaround plan of 2012 involved $5 billion fund infusion, over 10 years, which is not a big thing for GoI. I am sure they don't need to borrow from foriegn sources for such a small amount
.India's annual budget is around $340 billion.
 
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BawliBooch
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Re: Indian govt wants to exit AI

Sat Jun 03, 2017 4:27 am

devmapper wrote:
For example, AI currently has 65 narrow-body aircraft (not counting any ATR). As VTORD and dtw2hyd point out, some of them are put on international routes. 9W has the same number of narrowbodies as AI and has 4% more domestic marketshare as AI. So why is AI the "bakra" (goat) and why isn't 9W subject to the same criticism from a marketshare perspective?


Ai has a larger proportion of NB's deployed on international sectors as compared to 9W. In addition, some part of its NB fleet is kept aside as an emergency reserve - usually 2/3 A32S's parked on the airforce side of the tarmac. These are used in cases where emergency evacuations are required - the last time being when Chennai was flooded. (Govt doesnt pay AI a pie for this BTW - its an obligation as a national carrier). In May-June, and again in Nov-Dec period, they operate large scale military charters for troop movements almost all of it with A32S aircraft(flights with a 4-digit number beginning with 3xxx).

Then there are the inefficiences associated with running a hub - a not-so-insignificant part of the NB fleet hatches eggs at DEL so as to time flights with the arrival/departure bank concept. 9W being free of the hub model bleeds its assets more - especially post 2014 when they launched a gazillion mid-night flights on domestic routes.

Considering all this, I am surprised the difference between AI & 9W on domestic routes is just 4% with a similar fleet.
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devmapper
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Re: Indian govt wants to exit AI

Sat Jun 03, 2017 6:38 am

lightsaber wrote:
Any narrowbody international traffic is in danger of competition from 6E. In particular as the NEO overcomes any range handicap of the high density configuration.

6E has not shown any inclination towards international operations. If AI (and perhaps IX) shut down, will this change? I don't think so. 6E has been focused primarily on increasing its domestic frequencies and quite soon they'll reach a critical mass where any incoming aircraft is used to replace older ones returned to the lessors. (I believe 6E has a 6 year lease period on all its aircraft).

lightsaber wrote:
9W has reformed nicely since EY bought into their management. For the same number of aircraft and significantly more market share...

BawliBooch wrote:
Considering all this, I am surprised the difference between AI & 9W on domestic routes is just 4% with a similar fleet.

There seems to be quite a difference of opinion here. But to address lightsaber's concerns, the same Financial Express article that I quoted, indicates that while AI has held its marketshare level, 9W has lost close to 2% marketshare over the same time period. If 4% difference in marketshare is significant, then what do we say to a 2% loss in marketshare in one month? So again, why is this love for 9W over AI?

lightsaber wrote:
How about we compare metrics
How many hours per day, on average is AI flying their narrowbodies vs. Indigo or 9W?

I disagree on AI being the equivalent of Indigo or SpiceJet operationally. As 9W? Getting close, but no longer the main competition.

AI's aircraft utilization is nowhere near 6E or even SG, and that is something we all agree AI should improve. But if 9W's aircraft utilization is significantly higher than AI, then that essentially means 9W is flying more aircraft for not a whole lot more passengers. Again, I fail to see how that proves 9W is a better run airline than AI.

lightsaber wrote:
What is AI going to do if Indigo goes on a major international expansion? The NEO has far more range in a high density configuration than the CEO. This means quite a few more available routes.

How many international markets has 6E entered till now? At least SG had tried to open up new routes. Has 6E tried to open up any routes to China or Indonesia or indeed even Malaysia? Forget new markets, 6E doesn't even have a comparable coverage of the Middle East market. And that is not even counting IX.

lightsaber wrote:
If AI really is comparable, then no worries. But Indigo is accelerating expansion. They should be expanding as they are profitable.

AI is adapting. Just about 5 years too late to matter.

Lightsaber

AI's domestic operations cannot hold a candle to 6E or SG. But, as I have been trying to point out, AI seems to have decided to focus on some niche routes domestically, and by and large feed its international operations. If we accept that premise, then I think AI has right-sized its domestic operations.

Here is an article that covers AI's wide-body aircraft utilization and domestic-to-international capacity ratios:
http://www.financialexpress.com/industry/air-india-to-buy-4-boeing-dreamliners-use-450mn-bridge-loan-to-fund-purchase/698903/
Currently, the average daily utilisation of the 787 is between 13 to 14 hours a day. Apart from the Dreamliners, Air India will also add a Boeing 777 wide body aircraft by January 2018. Currently, Air India is the largest operator of non stop flights to United States, United Kingdom and other European destinations.
Almost 75% of the capacity of Air India is deployed on the international sector. The airline is in the process of inducting 14 A320 narrow body aircraft from Alafco, a Kuwait -based aircraft leasing company which will mostly replace the old narrow body aircraft deployed in the domestic sector.


BawliBooch wrote:
Ai has a larger proportion of NB's deployed on international sectors as compared to 9W. In addition, some part of its NB fleet is kept aside as an emergency reserve - usually 2/3 A32S's parked on the airforce side of the tarmac. These are used in cases where emergency evacuations are required - the last time being when Chennai was flooded. (Govt doesnt pay AI a pie for this BTW - its an obligation as a national carrier). In May-June, and again in Nov-Dec period, they operate large scale military charters for troop movements almost all of it with A32S aircraft(flights with a 4-digit number beginning with 3xxx).

A lot of people on A.Net either do not know or perhaps choose to discount the restrictions that AI has to endure as a GOI-owned entity. Also, as dtw2hyd has documented here in the past, a lot of the debt is actually borrowed at much higher interest rates from GOI-owned banks, since the GOI doesn't allow AI to seek working capital financing from international banks whose rates are much lower. People look at the numbers on equity infusion, but don't look at the amount of money AI keeps paying the GOI-owned banks as interest.
I am not going to suggest everything is fine with AI, but a lot of the criticism directed at the airline should perhaps be directed at the GOI instead.
 
devmapper
Posts: 219
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Re: Indian govt wants to exit AI

Sat Jun 03, 2017 6:44 am

goacom wrote:
Anshabhi's cavalier attitude towards public money demonstrates what is wrong with AI and with those who support wasting tax payer's money on elitist self serving projects like AI. I could definitely use a very tiny fraction of the paltry $5 billion towards the school that my friends and I are helping setup in a remote part of India, thanks to a woefully funded public school in which the teachers never show up. Some people seem to be very generous when it comes to spending other people's money. Absolutely disgusting.
Air India should be renamed Pyramid Air. It is a pyramid scheme that relies on pouring good money into an eternal black hole that has no chance of being paid back.

Sadly, attitude towards public money in India isn't much to talk about. I am also not going to advocate for the continued state of affairs with respect to AI. But perhaps, considering the operational challenges BawliBooch has documented, we might want to temper our criticism for AI and instead also redirect some of that criticism to the owners?

BawliBooch wrote:
Ai has a larger proportion of NB's deployed on international sectors as compared to 9W. In addition, some part of its NB fleet is kept aside as an emergency reserve - usually 2/3 A32S's parked on the airforce side of the tarmac. These are used in cases where emergency evacuations are required - the last time being when Chennai was flooded. (Govt doesnt pay AI a pie for this BTW - its an obligation as a national carrier). In May-June, and again in Nov-Dec period, they operate large scale military charters for troop movements almost all of it with A32S aircraft(flights with a 4-digit number beginning with 3xxx).

Then there are the inefficiences associated with running a hub - a not-so-insignificant part of the NB fleet hatches eggs at DEL so as to time flights with the arrival/departure bank concept. 9W being free of the hub model bleeds its assets more - especially post 2014 when they launched a gazillion mid-night flights on domestic routes.

Considering all this, I am surprised the difference between AI & 9W on domestic routes is just 4% with a similar fleet.

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