Governments Role Use of AI and IA for official purposes, were the payments made (timely, or late or not at all)

Cash strapped Air India has approached the government to recover Rs 1,222 crore dues towards operating VVIP and special flights over the past five years . However the government is likely to give the airline a little over Rs 800 crore for operating three flights for VVIP and evacuation operations carried out. In the past five years, the ailing airline operated 47 VVIP flights for which the Boeing 747-400s were withdrawn from commercial services for 313 days, sources said today. Cash strapped Air India has approached the government to recover Rs 1,222 crore dues towards operating VVIP and special flights over the past five years . However the government is likely to give the airline a little over Rs 800 crore for operating three flights for VVIP and evacuation operations carried out.

In the past five years, the ailing airline operated 47 VVIP flights for which the Boeing 747-400s were withdrawn from commercial services for 313 days, sources said today. 7 sep 2011: The Lok Sabha was informed today that various ministries and government agencies owe close to Rs 150 crore to cash-strapped airline Air India. Replying to a question in the Lower House, Civil Aviation Minister Vyalar Ravi said that as on 31 March 2011, the outstanding amount due from various ministries and agencies to Air India stood at Rs 146.12 crore. he External Affairs Ministry owes Rs 25.98 crore, the Defence Ministry owes Rs 32.07 crore and the Home Ministry owes Rs 28.35 crore, among others, to the state-run carrier. The delay in payment was due to the non-availability of sufficient amounts in the Budget of those Ministries and other procedural delays in the processing of these bills, Ravi said. He added that Air India has decided to raise the invoices expeditiously and pursue the matter with the respective ministries for early payment. Ravi further said that in 2010-11, Rs 40.46 crore was received for wide-body aircraft, while Rs 180.85 crore was collected for narrow-body aircraft. In a written reply to another query, Ravi said that an amount of Rs 94 crore was due from the Centre on account of the guarantee fee for 2011-12.

No pay hike for pilots since 1998, Introducing PLI(Performance linked Incentives), pilots objected to it as it reduced their wages significantly(50-60%). What is the wage structure for other airlines? In 2003-04 AI had a profit of 105 cr, now loss of 7000 cr, and debt of more than 50,000 cr. V subramaniam-financial advisor to minister of avaition and board member of AI had strongly objected to the proposal of buying 68 aircrafts(Costing 50000 cr) without any revenue plan, route plan . He was evicted the week after from both the posts.

Between January and August 2004, there wasn't much change in the aviation scenario - either by way of load factor or growth in traffic. Yet, the meeting presented a bizarre justification for the purchase of new long-range aircraft. The original plan to purchase 28 aircraft incidentally was approved by the AI board during the NDA government. At its meeting on November 8, 2003, the board had approved a project report for acquisition of 10 A- 340- 300 long range aircraft, plus 18 B 737-800 short range aircraft. This report was sent to the government in January 2004. So, Patel's ministry overturned the earlier decision.

Routes at which air india operates, planning to operate, and which it gave away
This sector, on which American/Canadian airlines were already operating non-stop flights and based on which fact Air India was made to reconsider its fleet requirement, turned out to be a loss-making sector right from the date of commencement and continued to be so, the CAG report said. Thats again largely the handiwork of Praful Patel.

Merger between AI and IA

On the merger, CAG found little justification for the governments in-principle approval of the merger. In fact, the aircraft purchase decision, taken together with the merger, was like a double blow because both Air India and Indian Airlines had ordered aircraft keeping their separate requirements in mind. When they merged, there were just too many aircraft of the wrong kind for the wrong routes. The benefits of the merger would have come from route and aircraft optimisation. But Indian Airlines had made a separate order for 43 Airbus aircraft before the merger.
The CAG says as much. The potential benefits for the merger would have been far higher had this (route and aircraft planning) been undertaken before finalisation of the massive and separate fleet acquisition exercises undertaken by Air India and Indian Airlines.

Buying of Aircrafts The report stated that no benchmark for the cost of aircraft was carried out before negotiations for buying them and the acquisition seemed to be supply driven. Pegging Air Indias debt liability at Rs 38,234 crore in March 2011, it added that Air India hastily reworked its earlier acquisition plan.

Solutions

So what are the lessons to be learnt from the CAG report and the saga of Air Indias flight to disaster. One, ministers should be divested of the task of running public sector enterprises. Praful Patel should have been making policies for the sector, not meddling in how Air India is run. Good ministers may actually end up protecting public sector monopolies, but Patel ended up ruining Air India. Either way, ministers should be kept at arms length from public sector companies. They either do damage to the sector (by bad policy) or the companies (by bad decisions). This conflict is at the root of public sector mismanagement. Air India first and foremost, needs a professional Chief Operating Officer with years of airline experience and a master of global best practices to execute the corrective actions needed to repair the malaise affecting the airline. Two, mergers make no sense unless the economic rationale is clear. Worldwide, two-thirds of mergers fail to deliver the goods primarily because of the people factor making people from two different companies and cultures work together, not to speak of rationalising and

unifying their salary structures. Air Indias merger failed partly because of its failure to resolve HR issues before the merger. Three, there is no point throwing good money after bad in public sector units. In Air Indias case, the only flaw in the CAG report surfaces here. It has suggested an equity infusion to help the airline reduce its debts and give it a chance to succeed. Air India is currently seeking an equity infusion of Rs 6,600 crore, but given its scale of losses, there is no way it can be made viable if ministers and babus are going to run it.

Air India as a Brand 1- Customers experience- covering 7 ps, 2- Brand value 3- Preference

Market share as of may 2011- 13.2%, find out the graph of market share for the past. Occupancy rate- 78.1 % and cancellation rate- 18 % Indigo-89.4 Cancellation less than 1% for all of them Kingfisher- 88.4 Go air- 87

During 1999-2000, Air-India suffered a net operating loss of Rs. 75 crores. What the apologists of disinvestment have not seen it fit to mention is the fact that the airline had worked to get its act together, and would last year have posted a healthy le vel of profit if it was not for regulations that placed Air-India at a disadvantage vis-a-vis international carriers. For example, aviation fuel charges in India are some 40 per cent higher than elsewhere in the world, a major liability for an air line that has no option but to run half its flights from India. In addition, Air-India pays state sales taxes on aviation fuel at rates up to 35 per cent. International carriers refused to pay the tax from 1994, citing conventions of the International Ai r Transport Association (IATA). They have not been forced to comply, but Air-India has been made to do so. Government regulations have affected Air-India in less evident ways too. From a low of $00.63 a gallon in April 1999, international fuel prices climbed 72 per cent to $1.05 a gallon by March 2000. Anticipating this increase, international airlines hedged their purchases, making forward purchases at $0.75 a gallon. This practice is generally frowned upon in public sector enterprises for a variety of reasons, some of them sound ones. But the failure to hedge, along with high levels of taxes and surcharges, none of which are of Air-India's making, cost the airline about some Rs.180 crores. Interestingly, airlines which are touted as models of efficiency, notably Lufthansa (of Germany) and Singapore Airlines, receive bulk purchase discounts. Air-India used to receive similar discounts until the mid-1980s, when the practice was discontinued under pressure from the Finance Ministry.

HR Issues
Flights have been delayed, cancelled due to shortage of crew.
I feel like a woman with 1,000 husbands, one male Air India executive complained, referring to the constant demands from government officials. Of the 186 foreign pilots hired since April 2007, Air India has just 36 left, the company said. Training:

Pilots interviewed for this article expressed safety concerns about basic operations at Air India particularly its training procedures, which many said were not adequate for teaching the hundreds of new pilots the airline needs for its expansion. Some, like Mr. Haygooni, spoke freely. Others insisted that their identities not be revealed because they said the industry did not reward whistleblowers.

Expatriate Air India pilots said they were most worried about an inadequate training system that they said created co-pilots with excellent book knowledge but little real-life flying experience. The biggest problem is if I have a heart attack, this kid isnt going to be able to get the plane on the ground, said one current Air India pilot, who has more than 25 years of commercial airline experience.
Check this out: http://www.rediff.com/business/slide-show/slide-show-1-what-is-wrong-with-air-indiamanagement/20101123.htm

Friegther ppt: http://www.filedigg.com/fileView?url=http://www.stattimes.com/aci2010/presentation/Anita_K hurana.ppt&title=Freighter%20Conversion%20%E2%80%93%20Air%20India%E2%80%99s%20expe rience

Management blunder Air India management has not learnt from mistakes. Despite running losses of over Rs 13000 crore, the management continues to take decisions that only pull the Maharaja deeper towards destruction. Everyone thought the pilots strike would wake up the Air India management and start a process that would eventually lead the airline on a path to recovery. On the contrary, mismanagement continues. CNN-IBN has learnt that Air India transferred about 70 pilots to Air India Express, its low cost arm based out of Kochi. These pilots were to be trained as commanders for the aircraft the Boeing 737,

short-to medium-range jet airliner to be used for the Gulf and South East Asian destinations. They were to replace expat pilots. These pilots were put on simulators in India and Dubai for over 5 months. Their training has been on for the past one year. The cost of training is anywhere between Rs 15-25 lakh per pilot. If the flying time and cost of training is calculated, then it works out to over Rs 17 crore rupees. And here is the shocker - the management has now decided to transfer these pilots back to Air India. Top sources in Air India confirm that the pilots will now be trained on the Boeing 777 which is a long range aircraft. Why was this sudden change in decision? Sources say Air India express was short of trainers to give the 70 pilots training in actually flying the aircraft after the simulator training. Many of the pilots were also frustrated after a year as their chances of becoming a commander slimmed. They wanted to return to Air India. Air India express realised their blunder only after spending crores on training and wasting precious flying time of these pilots. Air India sources are also pointing at intense turf war between senior managers at Air India and Air India express for this bungle. As the management continues to fumble and lose crores the Maharaja already in ICU, continues to lose vital signs.