Sounds like a good plan as it would would leave AI with just 9,000 employees. I hope the employees that will be relocated are agreeable.
http://timesofindia.indiatimes.com/b...000-staff/articleshow/12639271.cms

Quote:
Giving a major boost to cash- strapped Air India, government on Thursday announced a turnaround package with a Rs 30,000 crore equity infusion over a nine- year period and induction of 27 Boeing 787 Dreamliners.

In another development, the government also approved a proposal to hive off Air India's MRO (maintenance, repair and overhaul) business and its Engineering Services as two wholly-owned subsidiaries, placing about 19,000 of around 28,000 total employees with them.

To questions about the two subsidiaries which are to be floated, he said while the MRO subsidiary, to be called Air India Engineering Services Limited, would get equity of Rs 375 crore over the next three years, the one handling ground handling, named Air India Air Transport Services Limited, would get Rs 393 crore as equity over 12 years.

Maintaining that both the new subsidiaries would be operationalised soon, the Minister said the MRO subsidiary, where about 7,000 Air India employees would be placed, was expected to tap the potential of nearly USD 1.5 billion MRO business in the Asia Pacific Region.

Similarly, the subsidiary dealing with ground handling and other services would employ about 12,000 Air India staffers. "Both these subsidiaries would be developed as independent business and profit centres".

Asked whether any unrest among employees was expected, Singh said the Justice Dharmadhikari Committee, which had gone into the staff-related issues connected with the merger of two erstwhile government carriers, had also recommended it.

Air India make Olympic look like a well-run operation...

Quoting Reply 1): Air India make Olympic look like a well-run operation...

And PK, CY, BG, etc. all make look AI look like a world class operation.

AI has done a better job than I would have thought possible dealing with some of the hardest operating conditions in the world - most other airlines do not have to worry about being torn apart by management, labor, and the government all at the same time, and still run a safe, reasonably reliable operation with a solid product.

It's easy to be an armchair CEO and say that AI sucks. It's nearly impossible to actually do something about it.

Quoting LAXDESI (Thread starter): Sounds like a good plan as it would would leave AI with just 9,000 employees. I hope the employees that will be relocated are agreeable.

I don't think the employees will care as long as they get their salaries.

I think the plan is mostly a good one. I disagree with some small points, but you can't have everything in life. You can never underestimate the power of the Indian bureaucracy to mess good plans like this up - remember when they forced a bunch of senior pilots into retirement, just to rehire them as contractors for higher wages a few weeks later, in addition to pension?

Quoting LAXDESI (Thread starter): Giving a major boost to cash- strapped Air India, government on Thursday announced a turnaround package with a Rs 30,000 crore equity infusion over a nine- year period and induction of 27 Boeing 787 Dreamliners.

Note that the first Boeing 787 delivery is expected within two weeks! Excellent news indeed.

Quoting Reggaebird (Reply 3): Note that the first Boeing 787 delivery is expected within two weeks! Excellent news indeed.

Not within - a little over 2 weeks. The rumor is Saturday, April 28th.

Quoting aeroblogger (Reply 2): I think the plan is mostly a good one.

I wonder if a lean AI with DEL base and part of STAR alliance could not undertake a JV with United on India-US routes few years down the road.

Quoting LAXDESI (Thread starter): as two wholly-owned subsidiaries, placing about 19,000 of around 28,000 total employees with them.

Quoting LAXDESI (Thread starter): Sounds like a good plan as it would would leave AI with just 9,000 employees. I hope the employees that will be relocated are agreeable.

The airline may end up with 9,000. But they are still paying 28,000 because they are Fully Owned Subsidiaries. This doesn't help them at all, they will still see the losses from each division at the end of the day.

Quoting LAXDESI (Reply 5): I wonder if a lean AI with DEL base and part of STAR alliance could not undertake a JV with United on India-US routes few years down the road.

From AI's point of view, that would be great. From UA's point of view, it also would be pretty good.

From my point of view, it would be absolutely terrible. The days where I can get $800 roundtrips to India would be long gone.

FWIW, AI doesn't need to be lean for this to happen - a JV is primarily a revenue sharing agreement, not a cost sharing agreement.

This sounds like what was done w/ AZ. How did that work out?

Quoting aeroblogger (Reply 7): FWIW, AI doesn't need to be lean for this to happen - a JV is primarily a revenue sharing agreement, not a cost sharing agreement.

I thought JV was a profit/loss sharing agreement, and so revenue and cost would both be part of the equation.

Quoting MaverickM11 (Reply 8): This sounds like what was done w/ AZ. How did that work out?

Perhaps AI/UA JV may work out as well as the one between UA and LH.

Quoting LAXDESI (Reply 9): I thought JV was a profit/loss sharing agreement, and so revenue and cost would both be part of the equation.

JV's can be that as well. If UA were to agree to a JV with a partner with costs as high as AI, the agreement would probably share revenue on a ASM basis, adjusted by CASM of aircraft.

Then again, I don't work for either airline, and I am not the one agreeing to these agreements. That's just how I would expect a JV of this type to be framed.

Quoting MaverickM11 (Reply 8): This sounds like what was done w/ AZ. How did that work out?

Nicely   I hope that AI can get to the same quality result.

Quoting aeroblogger (Reply 10): Nicely I hope that AI can get to the same quality result.

What happened to the crap part that was spun off? The airline is 'sorta' back on the mend but what about the MRO/ground services part that was piled on with problems and set adrift?

Quoting MaverickM11 (Reply 11): What happened to the crap part that was spun off? The airline is 'sorta' back on the mend but what about the MRO/ground services part that was piled on with problems and set adrift?

That's still adrift. But that's not Alitalia's problem anymore, is it?  

Quoting LAXDESI (Thread starter): To questions about the two subsidiaries which are to be floated, he said while the MRO subsidiary, to be called Air India Engineering Services Limited, would get equity of Rs 375 crore over the next three years, the one handling ground handling, named Air India Air Transport Services Limited, would get Rs 393 crore as equity over 12 years.

From where will this equity come? From the float or is it government "seed money". In my view they are pretty unatttactive assets being set loose in a very competitive environment . They have no history of competing against others and the world is awash with very efficient companies offering engineering and ground handling services to airlines. Will AI be free to seek competitive bids from others for these services?

Quoting aeroblogger (Reply 2): It's easy to be an armchair CEO and say that AI sucks. It's nearly impossible to actually do something about it.

If it is 'nearly impossible to actually do something about it' then the airline should be shut down. What a waste of taxpayers money to keep plowing funds into a bottomless pit. Regardless, I am confident that that will most likely never happen and I am equally confident that this won't be the last 'investment' taxpayers have to make to keep this quango solvent.

Quoting aeroblogger (Reply 2): And PK, CY, BG, etc. all make look AI look like a world class operation.

This is what you are resorting to? Comparisons with BG? Bangladesh Biman? If all that AI can hang their hat on is that they are a better run operation than Biman well I think that says it all. Unless & until AI (& it's apologists) aim higher than Bangladesh Biman there is no hope. No disrespect is intended for BG, but they are not recognized by anyone through any quantitative or qualitative analysis as being an airline that ranks in the world's top 25, or top 50 for that matter. You will argue that AI has had challenges just like BG. That may be true to some degree but AI also has several advantages over every carrier in SAARC starting with their cozy relationship with the taxpayer's money. You can't have it both ways. You can't argue that AI is a world class product & then say "BG ... make look AI look like a world class operation".

Quoting Reply 14): If it is 'nearly impossible to actually do something about it' then the airline should be shut down. What a waste of taxpayers money to keep plowing funds into a bottomless pit. Regardless, I am confident that that will most likely never happen and I am equally confident that this won't be the last 'investment' taxpayers have to make to keep this quango solvent.

Agreed. Canada's federal budget is at least three times as large as the Government of India & AC would be lucky to get a third of $6 billion. There are many better ways to spend $6 billion in India, even in civil aviation. Start with better infrastructure at airports. If I were the PM I certainly would not spend a tenth of $6 billion on AI if all the country will get in return is an airline that prides itself on the slogan "Hey, at least we are not Biman!"

And you wonder why airline like kingfisher goes belly up....They dont have the fed check book

Quoting ripcordd (Reply 16): And you wonder why airline like kingfisher goes belly up....They dont have the fed check book

No then according to the AI camp it is because the owner Vijay Mallya is a poor businessman & an egomaniac. Despite being successful in business in one of the most restrictive business environments, one which only began to reform in 1991. Vijay Mallya doesn't know anything about business. You can't win because they will take the best of their argument & compare it to the worst of yours.

I acknowledge that he may not know as much as he thinks about airlines. Of course he has made mistakes in overseeing the management of IT but one wonders if India was truly an open aviation market with no government carrier how IT would have done. One wonders if no ludicrous 5 year rule existed what could 9W & IT & others be today. The biggest question for anyone observing the Indian aviation market is what could have happened if the Government of India pulled the plug & allowed AI to die with some dignity years ago.

[Edited 2012-04-12 14:44:26]

Quoting pnd100 (Reply 17): No then according to the AI camp it is because the owner Vijay Mallya is a poor businessman & an egomaniac. Despite being successful in business in one of the most restrictive business environments, one which only began to reform in 1991. Vijay Mallya doesn't know anything about business. You can't win because they will take the best of their argument & compare it to the worst of yours. I acknowledge that he may not know as much as he thinks about airlines. Of course he has made mistakes in overseeing the management of IT but one wonders if India was truly an open aviation market with no government carrier how IT would have done. One wonders if no ludicrous 5 year rule existed what could 9W & IT & others be today. The biggest question for anyone observing the Indian aviation market is what could have happened if the Government of India pulled the plug & allowed AI to die with some dignity years ago.

Two things came from AI in KF's demise.

1. Market manipulation in setting prices and capacity.
2. Int'l saga, which forced Mallya into making a hasty decision to buy Air Deccan.

I together attribute about 45% of KF's demise to these two issues

Quoting vin2basketball (Reply 18): Two things came from AI in KF's demise. 1. Market manipulation in setting prices and capacity. 2. Int'l saga, which forced Mallya into making a hasty decision to buy Air Deccan. I together attribute about 45% of KF's demise to these two issues

The argument stated before was that knowing the rules, IT should not have bought Air Deccan. There are a few points I'd like to mention to that;

1) In business one has to strike within the window of opportunity
2) The transparency of how unfair the rule is & who it was clearly designed to protect should be obvious
3) It is also a fact that this (purchase of Deccan) contributed more than any other to IT's demise

I submit that if India was a truly open aviation market in 1994, both 9W & IT (and others) would be much stronger airlines & AI would be gone. That is IF the market was free & fair from 1994. It wasn't then, it isn't now & based on the attitudes of Indian taxpayers who shrug their shoulders at the inevitable it won't change. India's airlines outside of AI will continue to be fleeced & forced to fight AI & their government backers with one hand cut off

Quoting aeroblogger (Reply 2): AI has done a better job than I would have thought possible dealing with some of the hardest operating conditions in the world - most other airlines do not have to worry about being torn apart by management, labor, and the government all at the same time, and still run a safe, reasonably reliable operation with a solid product.

Hardest operating conditions? Everything you describe is internal (owners - the government) and self-influicted. These aren't "operating conditions". Serving a war-torn country with delapidated infrastructure and harsh weather conditions - now THAT'S an operating environment.

Quoting Reply 14): If it is 'nearly impossible to actually do something about it' then the airline should be shut down. What a waste of taxpayers money to keep plowing funds into a bottomless pit.

Agreed. If that's the attitude, then why bother? And why waste billions in the process? Strange approach.

Quoting aeroblogger (Reply 7): From my point of view, it would be absolutely terrible. The days where I can get $800 roundtrips to India would be long gone.

= Amusing as you tell us you are a fan of AI and want it survive ... and yet unwilling to maintain loyalties if AI actually does things right ... like charge consistent with cost ...

Saludos,
A.

Quoting sunrisevalley (Reply 13): From where will this equity come? From the float or is it government "seed money". In my view they are pretty unatttactive assets being set loose in a very competitive environment . They have no history of competing against others and the world is awash with very efficient companies offering engineering and ground handling services to airlines. Will AI be free to seek competitive bids from others for these services?

Quoting ripcordd (Reply 16): And you wonder why airline like kingfisher goes belly up....They dont have the fed check book

Totally agree..
This is another chapter of the AI stupidity story.
Some people has defended the money that Indian Gv'ment has injected in AI as a normal equity injection by a shareholder.
What now happens has no similarity to such a process. This is nothing than a pure tax payer subsidising of a heavily loss making business.
And the money to AI comes from the same corrupted government that froze ITs accounts....
Let AI die now, and make better use of the Indian peoples tax money.

First post after years of reading others.

Air India has roughly 30,000 employees. A 30,000 Cr. bailout means on average Rs. 10 Million per employee. A lot more than most Indians will earn in their lifetimes.

If we put Air India's Rs. 30,000Cr ($ 5 bn.) bailout in a social perspective.

Cost of feeding each of the 230 million hungry persons in India for a year - Rs. 23,000 Cr. (save Rs. 7,000 Cr)
Central govertnment outlay for the Department of Health and Family Welfare :
( http://wwww.indiabudget.nic.in )
- Fiscal 2010~2011 Rs.19,362.42 Cr.
- Fiscal 2011~2012 Rs.21,577 Cr.

Giving these social priorities, does India need to support a national carrier? By extension do any of the countries in the sub-continent?

I know this is a ridiculous suggestion, but may be, just may be, the government can consider PPP (public-private partnership) in Air India also. Retain ownership but lease out the airline to a private company to operate and share revenues or profits with; like it has done for Mumbai and Delhi airports, or how many five star hotels do with the erstwhile palaces in Rajasthan.

Quoting BLRAviation (Reply 23): I know this is a ridiculous suggestion, but may be, just may be, the government can consider PPP (public-private partnership) in Air India also Retain ownership but lease out the airline to a private company to operate and share revenues or profits with;

It's no more ridiculous than the status quo. In fact, short of either full shutdown or full privatisation ( neither of which I can see happening for different reasons) it actually seems the most sensible solution I have heard anyone make for AI.

Quoting BLRAviation (Reply 23): I know this is a ridiculous suggestion, but may be, just may be, the government can consider PPP (public-private partnership) in Air India also. Retain ownership but lease out the airline to a private company to operate and share revenues or profits with; like it has done for Mumbai and Delhi airports, or how many five star hotels do with the erstwhile palaces in Rajasthan.

Quoting kiwiandrew (Reply 24): It's no more ridiculous than the status quo. In fact, short of either full shutdown or full privatisation ( neither of which I can see happening for different reasons) it actually seems the most sensible solution I have heard anyone make for AI.

Flag carriers in other countries have made partial privatization work very well.

For example, TK - the government still has its say in where the airline should fly (like the recent Mogadishu route), and TK retains the advantages of Turkey's flag carrier, but at the same time, the airline is 51% privately held.

I think that this is the best option given the current political climate.

Quoting Reply 14): If it is 'nearly impossible to actually do something about it' then the airline should be shut down. What a waste of taxpayers money to keep plowing funds into a bottomless pit. Regardless, I am confident that that will most likely never happen and I am equally confident that this won't be the last 'investment' taxpayers have to make to keep this quango solvent.

Perhaps it should be shut down, but the political reality is that it won't be any time soon.

Quoting pnd100 (Reply 15): This is what you are resorting to? Comparisons with BG? Bangladesh Biman? If all that AI can hang their hat on is that they are a better run operation than Biman well I think that says it all. Unless & until AI (& it's apologists) aim higher than Bangladesh Biman there is no hope. No disrespect is intended for BG, but they are not recognized by anyone through any quantitative or qualitative analysis as being an airline that ranks in the world's top 25, or top 50 for that matter. You will argue that AI has had challenges just like BG. That may be true to some degree but AI also has several advantages over every carrier in SAARC starting with their cozy relationship with the taxpayer's money. You can't have it both ways. You can't argue that AI is a world class product & then say "BG ... make look AI look like a world class operation".

I have never said that AI has a quality operation. Many aspects of its operation are terrible (although a completely different class with PK, BG, CY).

Their [product is fantastic, their MRO stuff is great, their crew training is unparalled in India, and their reliability is passable. Pretty much the rest of the operation is in shambles.

From the point of view of a passenger, that's all I need - good product, well trained crew, proper maintenance, decent reliability. The fact that the rest of the operation sucks only matters to me when I'm looking at the airline financially.

Quoting ripcordd (Reply 16): And you wonder why airline like kingfisher goes belly up....They dont have the fed check book

No, it's because they were poorly run. If they had done a good job execeuting a good business plan, they would be just fine today.

Quoting pnd100 (Reply 17): No then according to the AI camp it is because the owner Vijay Mallya is a poor businessman & an egomaniac. Despite being successful in business in one of the most restrictive business environments, one which only began to reform in 1991. Vijay Mallya doesn't know anything about business. You can't win because they will take the best of their argument & compare it to the worst of yours.

Vijay Mallya being a very successful businessman? When?

All his success is inherited from daddy - apart from buying some liquor businesses and integrating into UB, he hasn't done anything to improve his businesses.

He's just managed to hold on so far and not ruin everything.

Quoting abrelosojos (Reply 21): = Amusing as you tell us you are a fan of AI and want it survive ... and yet unwilling to maintain loyalties if AI actually does things right ... like charge consistent with cost ... Saludos, A.

Of course not. If AI charged more, I'd still fly them. I just wouldn't be able to afford as many trips.

To understand why the government is doing what it is with Air India, may I suggest reading this article by TN Ninan titled "Do-gooder economics and the LokPal."

For the first time a journalist has had the courage to publicly voice a well known secret of how the political class distorts the market to create un-level playing fields and enrich themselves and their ilk from top to bottom.

The bailout of Air India is not for its employees. They are just the pawns on whose should the gun is fired from. The real beneficiaries are elsewhere.

Quoting BLRAviation (Reply 27): To understand why the government is doing what it is with Air India, may I suggest reading this article by TN Ninan titled "Do-gooder economics and the LokPal." For the first time a journalist has had the courage to publicly voice a well known secret of how the political class distorts the market to create un-level playing fields and enrich themselves and their ilk from top to bottom. The bailout of Air India is not for its employees. They

I remember that article.

It was nicely written, and certainly very illuminating.

The political reality is unlikely to change anytime soon. The way that the government holds onto their power is by supporting destructive policies that help the aam aadmi, the common man. Fuel companies must sell petrol at a loss. Electricity is virtually free for many people. Bribing the common man is the election technique of choice.

And since corruption is accepted by society as a fact of life, reformers will never get into power - they can't clear the first hurdle of buying the populace to enter office.

Most of the economic development in India has been in spite of the Indian government, not because of it. However, the Indian government also has success stories, and I am hopeful that Air India can be one day be considered one of these success stories. It has so much potential - it is equipped with everything a world class airline needs. I remain hopeful that AI will be able to reform, to become a great carrier someday.

The political reality, for rather complex reasons, is that AI will never be shut down or completely privatized. We can only hope that it will improve.

Quoting BLRAviation (Reply 23): First post after years of reading others. Air India has roughly 30,000 employees. A 30,000 Cr. bailout means on average Rs. 10 Million per employee. A lot more than most Indians will earn in their lifetimes. If we put Air India's Rs. 30,000Cr ($ 5 bn.) bailout in a social perspective. Cost of feeding each of the 230 million hungry persons in India for a year - Rs. 23,000 Cr. (save Rs. 7,000 Cr) Central govertnment outlay for the Department of Health and Family Welfare : ( http://wwww.indiabudget.nic.in ) - Fiscal 2010~2011 Rs.19,362.42 Cr. - Fiscal 2011~2012 Rs.21,577 Cr. Giving these social priorities, does India need to support a national carrier? By extension do any of the countries in the sub-continent? I know this is a ridiculous suggestion, but may be, just may be, the government can consider PPP (public-private partnership) in Air India also. Retain ownership but lease out the airline to a private company to operate and share revenues or profits with; like it has done for Mumbai and Delhi airports, or how many five star hotels do with the erstwhile palaces in Rajasthan.

First of all BLRAviation, welcome to Airliners. I've enjoyed reading your blog for a few years & you will see that I have often cited it here. Secondly I agree with your assessment listed above.

Quoting Asiaflyer (Reply 22): Totally agree.. This is another chapter of the AI stupidity story. Some people has defended the money that Indian Gv'ment has injected in AI as a normal equity injection by a shareholder. What now happens has no similarity to such a process. This is nothing than a pure tax payer subsidising of a heavily loss making business. And the money to AI comes from the same corrupted government that froze ITs accounts.... Let AI die now, and make better use of the Indian peoples tax money.

  

Quoting kiwiandrew (Reply 24): It's no more ridiculous than the status quo. In fact, short of either full shutdown or full privatisation ( neither of which I can see happening for different reasons) it actually seems the most sensible solution I have heard anyone make for AI.

   The status quo is so outrageous it seems like AI is a comedic parody of a real airline.

Quoting aeroblogger (Reply 26): From the point of view of a passenger, that's all I need - good product, well trained crew, proper maintenance, decent reliability. The fact that the rest of the operation sucks only matters to me when I'm looking at the airline financially.

Do you pay taxes aeroblogger? Does your family? If so, do you not care where your tax money goes? I'm glad you have had good experiences flying AI but without exaggeration you are the only person I have ever heard this from based on a sample size of at least 100 people who have flied this airline in the last dozen years. Even an informal poll on A.net will show you that the majority of the flyers do not agree with your view of AI even as a good product from a passenger standpoint.

Quoting aeroblogger (Reply 26): Vijay Mallya being a very successful businessman? When? All his success is inherited from daddy - apart from buying some liquor businesses and integrating into UB, he hasn't done anything to improve his businesses. He's just managed to hold on so far and not ruin everything.

Even if all he managed to do is hold on & not ruin everything: a) that is also a skill & b) that is far better than the management at AI has done. United Breweries is the world's second largest liquor maker by volume. Since Vijay took over in 1983-84, the UB Group has increased from a small operation. It has acquired over 60 companies. It's market cap increased by nearly 60% from 1984-1999, today is about $12 billion. He was involved in the establishment of the IPL & owns the Royal Challengers Bangalore, a simple cricket team that does something that AI can not - make a profit. He is worth over $1 billion. By the standards of most people that constitutes a successful businessman. Here's the kicker though - if Vijay Mallya only ran a lemonade stand & made a profit of just 1 rupee - that alone would make him more successful than the mess that is Air India.

[Edited 2012-04-13 05:00:49]

Quoting pnd100 (Reply 29): Do you pay taxes aeroblogger? Does your family? If so, do you not care where your tax money goes?

Of course I care. I do not support the fact that Air India wastes a ton of money. However, knowing the political realities here in India, I have resigned myself to the fact that Air India is not going anywhere, and I have adjusted my positions accordingly. I would not say that Air India is a well run carrier. I would not even say that Air India is better run than Kingfisher. The way Air India is torn apart by management, the government, and labor is horrible to watch.

I, personally, enjoy flying Air India. I think that there is no comparison in quality of product domestically, and the student fares are affordable. Therefore, I fly Air India a lot.

Just because I like to fly Air India today, that doesn't mean that I don't wish it was properly managed, making money, and something which I could be proud of. I wish I could say "Air India is such a fantastic airline that it makes me proud to be Indian, that it makes me proud to own a piece of such a fabulous company." That hasn't been true for some time.

I do think that people are unfairly harsh on AI. But in the end, that doesn't mean that Air India doesn't deserve a lot of the criticism that it gets.

Quoting kiwiandrew (Reply 24): In fact, short of either full shutdown or full privatisation ( neither of which I can see happening for different reasons) it actually seems the most sensible solution I have heard anyone make for AI.

Thanks Andrew.

Quoting pnd100 (Reply 29): First of all BLRAviation, welcome to Airliners. I've enjoyed reading your blog for a few years & you will see that I have often cited it here. Secondly I agree with your assessment listed above.

Thanks for the kind welcome. I am also thankful for your support and with your agreement of my assessment. I have converted my thoughts in to a post http://www.bangaloreaviation.com/201...sal-to-rescue-air-india-while.html

Quoting pnd100 (Reply 29): The status quo is so outrageous it seems like AI is a comedic parody of a real airline.

I have said before on my blog, Air India has long since been reduced from an airline and has essentially become the "NetJets of the Government of India".

Quoting aeroblogger (Reply 26): Vijay Mallya being a very successful businessman? When? All his success is inherited from daddy - apart from buying some liquor businesses and integrating into UB, he hasn't done anything to improve his businesses. He's just managed to hold on so far and not ruin everything.

Cannot agree with you there Rohit. Admit it or not, Mallya has grown the United alcobev business by leaps and bounds. Yes, Mr. Vittal Mallya built the base of the company, but the Kingfisher brand is a purely Vijay Mallya creation, and with the airline aside, it is a globally known brand which is an achievement in and of itself, and a brand that still commands respect and loyalty within India.

For a variety of reasons Vijay Mallya did not listen to the core group that built the original UB foundations and landed up spending and wasting a LOT of UB money in non-related businesses - Mangalore Refineries, United Telecom, UBICS, UB Engineering, etc.

The very fact that he has stood a concerted onslaught by the government and still has IT flying is a testament to his money power and political connections, and let me tell you, if you thought airlines were the intersection of big business, finance, politics, policy, and underground cash, you have not even seen the blip of the liquor business in India where cash flows more freely than the liquor and political connections are in to everything. Even today the liquor business in India will make Al Capone empire look like a church outing, minus the guns.

Quoting BLRAviation (Reply 23): Air India has roughly 30,000 employees. A 30,000 Cr. bailout means on average Rs. 10 Million per employee. A lot more than most Indians will earn in their lifetimes.

While I understand the money is probably going elsewhere... That is an unjustifiable amount per employee.

Quoting BLRAviation (Reply 23): Central govertnment outlay for the Department of Health and Family Welfare : ( http://wwww.indiabudget.nic.in ) - Fiscal 2010~2011 Rs.19,362.42 Cr. - Fiscal 2011~2012 Rs.21,577 Cr.

This amazes me... spending more to keep afloat a *fixable issue* (that has been left to rot) than... Well, let's just say this will become a political issue in a few years.

Quoting aeroblogger (Reply 26): Of course not. If AI charged more, I'd still fly them. I just wouldn't be able to afford as many trips.

But what would the majority of customers do? I suspect Indigo, Spicejet, and Jet would siphon away most customers. The net gain in revenue for AI would be small. The issue for AI is that they are in a very competitive market and pretending it is still a fully regulated market.

Between the money being sent down the drain on AI and the costs to other indian business for the protection it is receiving from the Indian government, it just isn't worth it.

Lightsaber

Quoting BLRAviation (Reply 32):

From a valuation perspective, would GOI be willing to give out such a large stake in AI at the likely market price (If Air India had a publicly traded company's market cap, then the total valuation would likely be $200 million or so). I personally don't see GOI giving out a ~50% stake for under a billion dollars, and one would have to be an utter fool to invest that much money (or an ego driven guy like Mallya or Branson) in the money pit that is AI.

Please understand, that simple PPP will not work without proper improvement in work laws and operational conditions. Air Canada, for example, is privatized, but still hamstrung by the arcane Canadian laws that force it to hold unproductive workers and provide services that may not be profitable.

Similarly, if AI with PPP is forced to keep on unproductive workers, maintain services to unprofitable destinations, and continue to split its operational work in an unproductive manner, then PPP will be useless. TK privatization was succesful because it was accompanied by a liberalization of Turkish aviation.

Quoting aeroblogger (Reply 30):

There is nothing harsh about telling the truth about AI.

Quoting pnd100 (Reply 29):

Air India is a once glorious airline who wasn't told by anybody that we've arrived in the 21st century. They plan their business like the world is still regulated; heck they don't even schedule their crews electronically (using a paper ledger)

Quoting vin2basketball (Reply 34): There is nothing harsh about telling the truth about AI.

Some people seem to revel in focusing on the negative. The complete truth mostly sucks, but there is also some positive to be found, that people love to ignore.

Quoting vin2basketball (Reply 34): Air India is a once glorious airline who wasn't told by anybody that we've arrived in the 21st century. They plan their business like the world is still regulated; heck they don't even schedule their crews electronically (using a paper ledger)

All crew scheduling on AI, IC, and IX is done electronically since 2010. Before that, most was done electronically.

Quoting vin2basketball (Reply 34): Similarly, if AI with PPP is forced to keep on unproductive workers, maintain services to unprofitable destinations, and continue to split its operational work in an unproductive manner, then PPP will be useless. TK privatization was succesful because it was accompanied by a liberalization of Turkish aviation.

Agreed. Liberalization is required for a PPP or privatization (partial or complete) to work out.

Quoting aeroblogger (Reply 35): Some people seem to revel in focusing on the negative. The complete truth mostly sucks, but there is also some positive to be found, that people love to ignore.

With due respect, since your view of Air India appears to be out of line from the views, experiences & facts that the significant majority of industry insiders & flying public have I will try my best to summarize. The national motto of India is Satyameva Jayate (Truth Alone Triumphs). In truth what AI is is not what you claim it to be. I agree that any topic can be skewed in one direction but simply trumpeting the positive points & ignoring the negative does not bring balance.

I do not begrudge you for being patriotic to your country & the fact you associate AI as part of your nation's identity. However if you truly wish to be patriotic I would encourage you to advocate on behalf of what is best for India & her people as opposed to what is best for AI & their cronies. Perhaps you should remember that 9W, IT, SG, 6E & the others are all Indian carriers. Perhaps you should remember that AI's mismanagement & poor reputation harm India. AI today is doing more damage to the country you love through wastage of taxpayer money & resources.

I understand that you are a student, on a budget & therefore AI offers you a great option. You should also accept that for many travellers this is not the case. There are those who are business flyers, VFRs, tourists, NRIs or PIOs who have given AI a chance in the past only to be burned. To those who have had this experience, saying that AI NOW has comfortable seats & NOW has good food or saying that they are better than Biman will not bring them back. You seem to be an intelligent & passionate individual & my only advice to you is to be more balanced & open minded regarding AI.

Quoting pnd100 (Reply 36): You seem to be an intelligent & passionate individual & my only advice to you is to be more balanced & open minded regarding AI.

Thanks, I really appreciate it. I'll really make an effort...

My problem is that

Quoting pnd100 (Reply 36): I agree that any topic can be skewed in one direction but simply trumpeting the positive points & ignoring the negative does not bring balance.

my nature is to want to bring balance to the conversation, not just to my own views. When I see an overly negative conversation, I tend to overcompensate with positive points.

I guess that kills my credibility though, so I will definitely try to keep my views more balanced.

Quoting pnd100 (Reply 29): 'm glad you have had good experiences flying AI but without exaggeration you are the only person I have ever heard this from based on a sample size of at least 100 people who have flied this airline in the last dozen years. Even an informal poll on A.net will show you that the majority of the flyers do not agree with your view of AI even as a good product from a passenger standpoint.

I think it's time for you to take a look at the trip report section  
Air India AI 102: 14/FEB/08: JFK-DEL: Y Cabin (by Abrelosojos May 4 2008 in Trip Reports)
Air India 777-200LR JFK-DEL In C W/Pix (by MHTripple7 Jan 5 2009 in Trip Reports)
First Time To Japan Part VII: AI KIX-HKG In F (by sutrakhk Sep 20 2010 in Trip Reports)
Air India Express B738 AUH-TRV [+pics/vids] (by UK_Dispatcher May 26 2007 in Trip Reports)
Air India 777-200LR DEL-JFK In J W/Pix (by MHTripple7 Jan 11 2009 in Trip Reports)
Air India AI 101: 17/JUN/09: CCU-DEL-JFK: J Cabin (by Abrelosojos Aug 4 2009 in Trip Reports)
Flying The 'NEW' Maharaja? AI In Y To CCU (by AI151 Oct 7 2010 in Trip Reports)

First page of what comes up on Google. I've read all the trip reports over the years, and all of them were positive (the worst one out of them still gave AI a 6.5/10, an said that he would fly AI again)

[Edited 2012-04-13 09:17:22]

Quoting aeroblogger (Reply 37): I think it's time for you to take a look at the trip report section   Air India AI 102: 14/FEB/08: JFK-DEL: Y Cabin (by Abrelosojos May 4 2008 in Trip Reports) Air India 777-200LR JFK-DEL In C W/Pix (by MHTripple7 Jan 5 2009 in Trip Reports) First Time To Japan Part VII: AI KIX-HKG In F (by sutrakhk Sep 20 2010 in Trip Reports) Air India Express B738 AUH-TRV [+pics/vids] (by UK_Dispatcher May 26 2007 in Trip Reports) Air India 777-200LR DEL-JFK In J W/Pix (by MHTripple7 Jan 11 2009 in Trip Reports) Air India AI 101: 17/JUN/09: CCU-DEL-JFK: J Cabin (by Abrelosojos Aug 4 2009 in Trip Reports) Flying The 'NEW' Maharaja? AI In Y To CCU (by AI151 Oct 7 2010 in Trip Reports) First page of what comes up on Google. I've read all the trip reports over the years, and all of them were positive (the worst one out of them still gave AI a 6.5/10, an said that he would fly AI again)

I acknowledge that recently the product on AI may have changed but that is not enough for me. Service matters & I am among many who will pay more for it. You may dislike Mr. Mallya & IT but their product was great as well, it does not save them from going out of business. If 9W or IT or any other Indian carrier mismanages a tenth of what AI has done, they are done. The ONLY reason AI is in the air is due to unfair backing by the Government of India. My objection to your posts is that when it comes to other Indian carriers you seem to have this laissez-faire attitude but then contradict yourself by promoting the opposite when it comes to AI. Anything is inevitable if you don't demand change. The bloated money pit that AI is & has been for years somehow deserves bailout whereas the legitimate trials of 9W or IT are dismissed to free market economics? That is blatantly unfair & in a democratic society like India citizens do have the power to eventually change it with the right attitude.

Quoting pnd100 (Reply 38): I acknowledge that recently the product on AI may have changed but that is not enough for me. Service matters & I am among many who will pay more for it.

Service is most definitely part of the product... It's called the "soft product" by FFs. I've found AI service to range from terrible to incredible, but it usually is pretty good.

Air India AI 101: 17/JUN/09: CCU-DEL-JFK: J Cabin (by Abrelosojos Aug 4 2009 in Trip Reports)

This trip report in particular noted the fantastic service that you can get on AI, where the FA went well above and beyond. I wish I could have a flight like that

Quoting pnd100 (Reply 38): n a democratic society like India citizens do have the power to eventually change it with the right attitude.

There are a billion people in India. Of these people, most are uneducated, living in poverty. These people are understandably not concerned with what is the best for the country in the long run. They are concerned about what affects them immediately - they have to pay their electricity bill. They have to find a job. They have to get access to drinking water. The only way to win elections and get these people's votes is by resorting to populism and running on destructive platforms, no matter what the cost is to the state. In India, the person who offers free electricity is the person who wins, not the person who promises to be fiscally responsible and improve India in the long run. That means that reform cannot and will not take place.

Devesh's link gave a great explanation as to the sad state of affairs:

Quoting BLRAviation (Reply 27): To understand why the government is doing what it is with Air India, may I suggest reading this article by TN Ninan titled "Do-gooder economics and the LokPal."

[Edited 2012-04-13 09:49:58]

Quoting aeroblogger (Reply 39): There are a billion people in India. Of these people, most are uneducated, living in poverty. These people are understandably not concerned with what is the best for the country in the long run. They are concerned about what affects them immediately - they have to pay their electricity bill. They have to find a job. They have to get access to drinking water. The only way to win elections and get these people's votes is by resorting to populism and running on destructive platforms, no matter what the cost is to the state. In India, the person who offers free electricity is the person who wins, not the person who promises to be fiscally responsible and improve India in the long run. That means that reform cannot and will not take place.

With due respect aeroblogger, please do not play the "poor" card in this matter. It is very difficult to gain any traction on any debate concerning India when this card is played as a convenience. When the argument suits them, the same people would be offended at the mere mention of poverty in India. Then they chant slogans like "India Rising", etc. They play references to Ambani, Mittal & yes even Mr. Mallya. As soon as they find it convenient they will use the poor card to try & excuse any inefficiency within the Indian system.

Of course there are poor in India, more so than almost anywhere else. Of course none of them care about AI. But they don't pay for AI, the taxpayer does. The poor in India do not pay tax. I'm referring to India's taxpayers since this thread is about the $6 billion gift they gave to AI. Do not conveniently ignore that India has one of the largest middle classes in the world with a market of at least 300 million at the most conservative estimates. The costs of living in India are still very low compared to elsewhere & therefore this burgeoning middle class has tremendous purchasing power. They fly & do so often.

Do the poor care about 2G phones? Do they care about Satyam computers? When the media wants they can expose corruption & people will follow them. India has a very robust media which can incite crippling protests with the slightest provocation. Pretending that you don't have the power the change things & then blaming the "uneducated poor" is an insult to them & to yourself. Furthermore this argument can't be made with someone like myself who has been in India half the time since 2007 at various places. I have enough sense to know the dynamics based on what I have observed. I may not be Indian but efficiency is the same worldwide & the mismanagement of taxpayer funds is understood in any language.

[Edited 2012-04-13 10:05:57]

Quoting pnd100 (Reply 40): With due respect aeroblogger, please do not play the "poor" card in this matter. It is very difficult to gain any traction on any debate concerning India when this card is played as a convenience. When the argument suits them, the same people would be offended at the mere mention of poverty in India. Then they chant slogans like "India Rising", etc. They play references to Ambani, Mittal & yes even Mr. Mallya. As soon as they find it convenient they will use the poor card to try & excuse any inefficiency within the Indian system.

I most certainly don't chant slogans like "India Rising." Every day when I walk to class, I pass a slum. And I am incredibly thankful for everything that I have - peace of mind when it comes to issues like food on the table, power, clean drinking water, an education, etc. While I am fortunate enough to have these things, the majority of Indians don't. And as long as the country fails to provide these things in a sustainable way, even though newfound prosperity has come to our land, India is falling, not rising. I won't start on my opinions on Ambani, Mittal, and Mallya  

Quoting pnd100 (Reply 40): Of course there are poor in India, more so than almost anywhere else. Of course none of them care about AI. But they don't pay for AI, the taxpayer does. The poor in India do not pay tax.

They may not pay taxes, but they vote. They own a piece of Air India, just like those taxpayers who actually fund AI.

Quoting pnd100 (Reply 40): Do not conveniently ignore that India has one of the largest middle classes in the world with a market of at least 300 million at the most conservative estimates. The costs of living in India are still very low compared to elsewhere & therefore this burgeoning middle class has tremendous purchasing power. They fly & do so often.

The middle class does not fly. They use the marvelous system that we have in India called भारतीय रेल (Indian Railways).
I can cite a bunch of studies if you want - the Indian middle class takes the train, and the elites fly.

The saddest thing about this whole thing is that a large amount of the Middle Class, who are paying for this bailout, will probably never be able to avail of their investment - they will never actually fly AI.

Quoting pnd100 (Reply 40): Do the poor care about 2G phones? Do they care about Satyam computers? When the media wants they can expose corruption & people will follow them.

The media exposes some corruption, makes it high profile, and the perpetrators hang out to dry. But the vast majority of corruption is not only never revealed, it is tolerated - why? Because people are helpless about it. Because the people who are perpetrating this corruption have the real power.

This is not particularly different than the rest of the world - for example, after the Wall Street crisis, the media made examples out of many people. Take, for example, Rajat Gupta, Raj Rajaratnam, and Anil Kumar. They were caught over the insider trading thing. I'm sure nobody doubts that they were guilty of a serious crime, and that is not acceptable. But in their testimonies, they testified that there were hundreds, if not thousands of other people who did the same thing. It was the accepted way of doing business. Do you see those hundreds/thousands of people in jail today? Of course not.

Quoting pnd100 (Reply 40): Pretending that you don't have the power the change things & then blaming the "uneducated poor" is an insult to them & to yourself.

I'm not blaming the "uneducated poor" - they are pawns in this game. The elites manipulate them through populism, and then run the country for themselves, happily looting whatever they can. Who loses? The middle class taxpayer, who neither benefits from the populism nor from the corruption.

I'm painting broad strokes here - obviously there are many exceptions, the situation is obviously much more complex. But this is the overall trend.

I'm sure that Devesh can provide better examples than I can - he has a much better understanding of this stuff. But I'm pretty sure the basic point is roughly the same.

[Edited 2012-04-13 10:29:44]

We will have to agree to disagree aeroblogger.

In my view based on several factors, AI does not deserve this bailout.

Quoting pnd100 (Reply 42): We will have to agree to disagree aeroblogger. In my view based on several factors, AI does not deserve this bailout.

Well, then we're not agreeing to disagree, are we?

I completely agree that AI does not deserve this bailout.

But whether they deserve it or not is irrelevant. The political reality is that they will not only get this bailout, but they will get as many bailouts as they need in the future as well.

Quoting aeroblogger (Reply 43): But whether they deserve it or not is irrelevant. The political reality is that they will not only get this bailout, but they will get as many bailouts as they need in the future as well.

You have a blog. BLRAviation has a blog. You are a part of the Indian media even if it is not on the scale of NDTV or IBN. The days of waiting until elections has changed. Today politicians or celebrities or corporations can fall on scandal at any time. The biggest reason is media. Flip through the news channels on Indian TV. There are going to be one or two topics that every media outlet will agree on. I assure you that if the media (which can start with industry bloggers) targets AI & the unfair system it will eventually change. No politician in India can withstand a corruption scandal because of the income inequities you alluded to earlier. $6 billion is no small amount of money, especially for a government that collects as little revenue per capita as India does. This notion that AI will always get bailouts is the reality as long as you as citizens / media decide it to be. I am absolutely not one of these "you can do anything if you set your mind to it" types, but not trying at all is worse. The shrugged shoulders attitude is what led AI into this mess in the first place.

[Edited 2012-04-13 11:34:02]

Quoting pnd100 (Reply 44): You have a blog. BLRAviation has a blog. You are a part of the Indian media even if it is not on the scale of NDTV or IBN. The days of waiting until elections has changed. Today politicians or celebrities or corporations can fall on scandal at any time. The biggest reason is media. Flip through the news channels on Indian TV. There are going to be one or two topics that every media outlet will agree on. I assure you that if the media (which can start with industry bloggers) targets AI & the unfair system it will eventually change. No politician in any democracy can withstand a corruption scandal. $6 billion is no small amount of money, especially for a government that collects as little revenue per capita as India does. This notion that AI will always get bailouts is the reality as long as you as citizens / media decide it to be. I am absolutely not one of these "you can do anything if you set your mind to it" types, but not trying at all is worse. The shrugged shoulders attitude is what led AI into this mess in the first place.

But what scandal is there? Air India wastes money. So do a lot of other Government of India enterprises. Air India is badly run in some (many) aspects. So are a lot of other Government of India enterprises.

This is nothing shockingly horrific, it's just another GoI enterprise.

As expected, AI unions oppose relocating of employees to MRO and engineering units.
http://www1.economictimes.indiatimes...ing-units/articleshow/12650683.cms

Quote:
A section of the Air India (AI) unions, which is opposed to the hiving off the MRO (maintenance, repair and overhaul) and engineering entities into two subsidiaries of the cash-starved flag carrier, today said they will meet next week to chart out their future strategy.

^^^ So there goes any thoughts of "carrot and stick" with AI - it's carrot all the way (of course I ignore the 6 months+ of deferred pay, but that was not intended as a stick).

Quoting pnd100 (Reply 44): You have a blog. BLRAviation has a blog. You are a part of the Indian media even if it is not on the scale of NDTV or IBN. The days of waiting until elections has changed. Today politicians or celebrities or corporations can fall on scandal at any time. The biggest reason is media. Flip through the news channels on Indian TV. There are going to be one or two topics that every media outlet will agree on. I assure you that if the media (which can start with industry bloggers) targets AI & the unfair system it will eventually change.

Its not the corruption itself. It is the entire feeding chain from top to bottom. What happens at Air India is a pittance compared to widespread diversion in public food, fuel, employment, education, etc. Anna Hazare tried and gave up. Sorry for being cynical.

Read this story on my blog, it has two links to stories printed as suo moto petitions to the Supreme Court of India. The editors were threatened, but never sued to prevent these stories from being opened in court.

Do you honestly believe that the Prime Minister does not know of the corruption by his ministers??

The system is designed for everyone, both in power, and in the opposition, to feed off, which is why no action is or will be taken. What happened to the CAG report. Big voices for a few days and then all is forgotten.

[Edited 2012-04-14 10:41:07]

Quoting BLRAviation (Reply 48): Its not the corruption itself. It is the entire feeding chain from top to bottom. What happens at Air India is a pittance compared to widespread diversion in public food, fuel, employment, education, etc. Anna Hazare tried and gave up. Sorry for being cynical. ... The system is designed for everyone, both in power, and in the opposition, to feed off, which is why no action is or will be taken. What happened to the CAG report. Big voices for a few days and then all is forgotten.

Indeed. Cynicism is widespread. I hear comments like "I wish we were an oligarchy like China, then at least something would get done," more than occasionally.

There is a lot to like about democracy, and the grass always seems greener on the other side. But the point is that the political system in place today is destroying our country, not improving it. All the advancement in India is in spite of the government, not thanks to it.