Air India has stopped bookings for US and Europe-bound flights upto May 15. Over 20 AI scheduled flights were cancelled yesterday from leaving Delhi and Mumbai, as the agitation by protesting pilots entered the third day. This, inspite of the Delhi High Court declaring the pilots’ stir illegal, and the pilots remaining defiant, stating that they would continue the stir if their demands are not met. At the time of writing, AI had sacked 45 striking pilots and went a step further to strip the pilots’ union of recognition.
The avitation sector is in deep trouble.
Reportedly, the pilots’ protest of mass `sick leave’ stems from the move to provide Boeing-787 Dreamliner training to pilots from the erstwhile Indian Airlines. The pilots are protesting against these former IA pilots, who moved to AI following merger of the two airlines in 2007, arguing that training them for the new Boeing 787 Dreamliner airplanes would threaten their career prospects. AI pilots also say the planes were ordered before the merger, and so, they should be given priority for training.
Training controversy apart, the airline loses nearly $2 million a day, and is beseighed with mounting problems due to rising fuel prices, competition from low-cost rivals and a record of labour disputes. AI has seen its fortunes dwindle despite the 2007 merger with IA. The firm has been making heavy losses and its debt burden has been increasingly, raising concerns about the long-term viability and future of the airline. The only reedeeming aspect for AI is that it is not the only cash-strapped carrier battling a mutiny by pilots. A section of Kingfisher pilots too have threatened to go on strike over the non-payment of salaries since December.
The the wake of the economic cricis facing the company, the government approved a debt restructuring plan to save AI, wherein Rs 30 billion would be injected into the airline by 2020. But, according to the Civil Aviation Minister, there will be many checks and targets that the company will need to achieve. This simply means that the funding will come only if the AI meets the performance yardstick set in the plan: About Rs 7.4 billion of AI assets would be converted into non-convertible debentures.The debt-ridden airline has outstanding loans and dues of Rs 67.5 billion.
Obviously, the restructuring was required since the government could not continue to spend public money on the loss-making airline. Some three months ago, three oil firms —- Indian oil, Bharat Petroleum and Hindustan Petroleum —- halted supplies to the airline for almost four hours for non-payment of dues. Last year, oil firms had put the airline on a cash-and-carry deal, which meant that AI would have to pay every time it refuelled its planes, rather than get a 90-day grace period usually given to make payments. The firms restored the credit limit on assurances from the government that payments would be made on time.
Now that the strike and cancellation of flights have been announced, it is clear that there is serious trouble for the passengers who are stranded midway, following the failure of the airline officials to accommodate them in other flights, or give any concrete information on when their flights will take off.
With pilots in a belligerent mood, the government must implement its professed “back-up plan” to deal with strike. The stir has adversely affecting holiday plans of thousands, and worse businesses, the latter which can trigger a cyclical chain of loss. Undoubtedly, stranded passengers must be assured a safe and timely passage. The government must use its power and get cracking.