Air India Could Be Forced To Shut Down In June

India’s aviation market has been a mess. Jet Airways is out of business. oneworld member Kingfisher is no more. And Star Alliance member Air India is teetering on the edge of bankruptcy.

The government-owned airline is currently surviving on subsidies while the country looks for a buyer to take over the flag carrier. It’s expected that the government would retain the airline’s $8.4 billion in debts, while the new owner would take the Star Alliance member airline nearly debt-free. The government just wants to stop additional bleeding. Last year India offered to sell 76% of the airline. Now they’re open to selling the whole thing in addition to retaining debt.

Air India has suffered decades of corruption. For instance the airline owned tens of millions of dollars worth of art, much of which was ‘lent’ to executives to display in their homes and went missing. They’ve tried cost cuts, like making flight attendants share hotel rooms, and revenue protection plans like telling employees not to upgrade their friends anymore. That hasn’t done the trick.

Over the summer six airports refused to sell fuel to Air India afraid of ever getting paid. They don’t have sufficient funds to get 12 grounded Airbus A320s in need of engine replacement back into the sky.

As the Indian government shops the airline, now there’s word that if they can’t find a buyer they may have to just shut it down in six months.

Sounding alarm bells, the official said Air India might well go Jet Airways way if a prospective buyer does not come on board by June next year.

…”We are some how managing the operations at present and at best we can sustain this situation till June. If a buyer does not come by that time, we will have to shut shop,” said the official on condition of anonymity.


Air India Boeing 777-200LR, Copyright: boarding1now / 123RF Stock Photo

A major stumbling block is that the government is seeking a privatization deal that fully protects the airline’s 9400 employees and 4200 contract workers. The government has publicly promised not to inject additional funds into the airline, beyond those already committed.

Since there’s little hope that current management will turn around the airline that means either a change in control or shutting down Air India. In reality the government will have to blink, either with additional funds or with the terms under which it sells the airline.

Here’s what it’s like flying Air India when they don’t spend money to fix the air conditioning.

About Gary Leff

Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel - a topic he has covered since 2002. Co-founder of frequent flyer community InsideFlyer.com, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »

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  1. India loves money losing enterprises even at this massive a scale. Fearing loss of employment I suspect the Gov’t will insist on burning more money rather than let private airlines expand into the vacuum left by the closure of Air India. A quick 2 minutes analysis suggest India could save 2 million lives per year if they shut Air India down. They won’t

  2. While it doesn’t speak to the broader issue, I had an internal flight on Air India last month (positioning for CX long haul) and it was fine.

  3. Air India like money alot, they conned me 380 USD that’s why they will not servive because of that inhuman habit . shame on Air India they can shut the airline even tomorrow, fake customers desk . that’s why even u don’t get customers coz if this inhuman habit u do to u customers. I’ll be happy when u will shut those flights until u have good service to the customers

  4. @Kirk Benson:. February is before June so it doesn’t sound like you have much to be worried about. But if you’re concerned you can back yourself up with a train ticket — the cancellation penalty is a few dollars.

  5. Good riddance if Air India goes bankrupt. Indian tax payers will no longer have to foot the bill for Indian officials to enrich themselves.

  6. I am baffled anyone would fly Air India voluntarily. There are plenty of local airlines that are much better (Vistara is my favourite) but I would not fly AI even if it was the only alternative in a given route

  7. 7H train ride. I have a week planned in India and 3 days flexible in Aurangabad, so something should work. Or cancel the India trip altogether. AI schedule works better than IndiGo which is why I booked them.

  8. @Kirk Benson: Yes, the train ride is admittedly very short ;-), but still enough to give you the flavor of the Indian train system — and it’s a shame to visit India and not take at least one train ride.

    That said, for our positioning flight from Kochi to Chennai we did elect to fly rather than take the train (to spend an extra full day in Kochi) and we elected Air India because the schedule gave us the extra buffer I wanted in Chennai — knowing that there were two Indie Go flights after the Air India flight that we could take if something went wrong with AI. Still, I kept a careful eye on both the weather and the availability on those backup Indie Go flights in the days leading up to our trip.

    I mention the train because the better classes of service do fill up well in advance. If you have any concern about the plane not going and don’t mind paying the $3 cancellation fee, having a train backup might make you feel more secure (at least, it would for me).

    We did not make it to Aurangabad, but our daughter (who was studying in Pune) did. If you are heading southwards Hampi is definitely worth a visit — one of the great ruined cities of the world on a par with Chichen Itza or Bagan, and I’d never even heard about it until I started researching the trip.

  9. When I was in India, I flew into the country on British Airways and around the country on Jet Airways. Since Jet Airways is no more, if Air India goes out of business, would there be a problem traveling intra-India by air? Just wondering, to be honest, I have no idea.

  10. @kirkbenson if you’re travelling from Bombay there are overnight buses which will get you there within 8 hours.
    There are also 2 trains IIRC, one leaves at about 7 or 8 am from CST station, there’s another one at 8 or 9 pm from the same station.
    Alternatively Indigo flies to Aurangabad.
    Or take a 3 hour cab ride to Pune and another 4 hour cab ride from there.

  11. @otherjustsaying you will still be able to fly intra India. Chances are it will be on an LCC as Vistara doesn’t have enough planes to replicate the 9W or AI networks as of now

  12. Congratulations Modi, and BJP with your help we are loosing top business. Now Air India is added to your credit

  13. I booked flight from Toronto to Delhi on 9th. feb
    And back to Toronto on 8th may. When I read above news my spine starts chilling. I think I should cancel my ticket but also feared how much they deduct and when they will credit back my doller.

  14. If the Government sectors return the outstanding payments to Air india and Modi pays his journey cost to Air India…this Airline can survive. Air India provides the best Service. Indigo flights are dangerous to fly. I don’t know..What Government plans…Killing all Airlines..

  15. I sincerely hope that AI goes belly up… The most pathetic airlines on the face of the planet. The staff are useless… No one picks up the phone when you call. No instruments work inside the plane.

  16. I hope the AI goes bankrupt and shuts down. The most pathetic airlines on the face of the planet. No one picks up the phone when you call. None of the instruments work inside the plane. The staff are extremely rude.

  17. Hello there,

    This shutdown will never happen or atleast sooner.

    I travel on international routes some of their fares are very uncompetitive despite 20% flight unfilled.

    Staff has been very good and great service ( often travel with china southern, thai, Singapore Airlines too ).

    To me problem is lot of Minister officials travel on executive seats and they dont pay ( internal source ).
    It is national carrier and has to run routes which are unprofitable but only route of connection ex to Leh Laddak.

    No.of officials on foreign postings are paid too much and overstaffed there.

    Corruptuon on higher scales .Aviation ministers take bribes from route sanctions to uniform clothes commission.
    As corruption is run by Govt and they travel free with their families which wont be there once goes out.So I think they will never sell it or shut it down.

    Just Air India alone canmake it profitable but Govt officials interferance and high level corruption will never get it where it should be…

    Good Luck as I would love to see my national carrier flying High always.

  18. I have a round trip flight San Francisco to Calcutta qnd back end March. What happens to my flight rickets if they go bankrupt?

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