Thursday, August 9, 2012

Some interesting facts about Indian Aviation and Air India from Indian Civil Aviation Minister

Below mentioned questions and answers are parts of Business Standard's interview with Civil Aviation minister Ajit Singh. For reading the full interview please visit the link "Of the 300 Air India routes, only three make money: Ajit Singh"

Q: What is the progress on allowing foreign airlines to invest in Indian skies?

A: FDI... will come only if we get consensus among all the allies...and if we allow them. We are definitely in financial stress. But FDI would be coming for other reasons — the growth we have the potential we have, a growing middle class, traffic rights and the strategic geographical position...

Consensus among allies!!! that too on FDI!!! Well, if we are waiting for consensus nothing is going to happen. The possibility of a consensus in FDI in the ruling alliance is lower than the possibility of a heavy rain in the Thar Desert. We may have a potential for growth, growing middle class, traffic rights and strategic geopolitical position but FDI is not a public tap where you will always get water without paying anything. It’s more like an angry elephant which always requires proper care.

Q: How are you working for the turnaround of Air India in the wake of the pilots strike and the financial problems it is mired in? How will you cut costs?

A: On many routes, we don’t even meet the operations cost. Of 300 routes, only three make money. AI does not even have the correct data...we will put half of the productivity linked incentive part into salaries and the rest will be paid only after the airlines make profits.

Operational cost... If we have such astronomical taxes on Aviation Fuel (AF) operational cost will certainly increase. Please note that this is neither the only one nor the main reason for increase in the operational cost. It's indeed an interesting thing to know that Air India is operating in 300 routes.

Why only three routes are making profit? If I am not wrong Air India's Gulf of Persian routes are certainly profitable. According to Air India’s website some of Air India's gulf destinations are Tehran, Kuwait, Dammam, Riyadh, Bahrain, Dubai, Doha, Sharjah, Abu Dhabi, Jeddah, Al Ain. Air India is already operating to these locations from multiple source cities of India. Even if I am leaving Tehran, Al Ain for various reasons, rest of the routes must be profitable considering the number of Indians working there. If Air India can't make these routes profitable then I am seeing little chance for its turnaround.

Q: You are also looking at monetising real estate and all that. How much work has been done?

A: AI has no idea where all its property is. We have an office in Milan and we have not flown there for 20 years. All over the world, we have paintings and land like that. A committee has been set up and in two months, we will have a complete list and evaluation. We have Rs 350 crores worth of paintings Nobody has done the valuation of real estate but estimates vary from Rs 5,000 to Rs 10,000 crores.

If the minister is correct, then what exactly Air India is doing in Milan? Especially, when it’s already have operations to Frankfurt, Amsterdam, London, Paris, Munich, Moscow, Vienna, Zurich etc.


There is an Airline called 'Japan Airlines' which recently recovered from its death bed. It will be better for Civil Aviation Ministry as well as the airline companies to take a look there. People may not be so much kind enough to digest a big bailout package for Airline companies...



1. Air India
2. Of the 300 Air India routes, only three make money: Ajit Singh - Business Standard

Photo Courtesy: Ministry of Civil Aviation, Government of India (GOI)

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