Air India hasn’t made payroll for December yet. The airline has an Airbus narrowbody grounded because it needs an engine replacement. The airline owns the engine. It can’t afford to send the engine to where the plane is.
One of AI’s Airbus has been grounded in Vadodara for almost a week as its requires engine replacement. The Maharaja has a spare engine for this single aisle aircraft in Delhi but is unable to send it as it can’t raise the e-way bill because of GST dues. “Our GST dues are about Rs 100 crore and because of that the paperwork required to send the engine to Vadodara is not being done.
Naturally since this is India the challenge Air India facings is both financial and about paperwork, and the government-owned airline can’t fix the government-owned plane because of money it owes to… the government. Which of course makes the government financially worse off, absorbing a grounded plane that cannot earn revenue.
The carrier plans to use forward ticket sales to pay back wages and the taxes necessary to move the engine and fix the aircraft. That leaves them without revenue, of course, to operate schedules in the future for which they’ve sold those tickets.
The government of India is trying to sell off money losing and deeply indebted Air India. They’ve said that if they cannot find a buyer there will be no further subsidies and the carrier would have to shut down in June. I’m skeptical that would happen.
Air India Boeing 777-200LR, Copyright: boarding1now / 123RF Stock Photo
Most likely the government finds a buyer of the ‘good assets’ while absorbing the carrier’s debt. Failing that in any game of chicken I believe the government would blink and extend further funds to the struggling flag carrier.
Indeed, with the expectation that the airline could go under if privatization isn’t successful and additional subsidies aren’t forthcoming ticket sales have dropped. That makes the airline less attractive to private buyers, and makes a shut down more likely. So the government is already hinting at more subsidies.
MoCA reiterates that the Government, while going ahead with the disinvestment, would ensure that @airindiain continues to operate uninterruptedly and improves its operations also. There is no cause for worry to any of its stakeholders.
— Ministry of Civil Aviation (@MoCA_GoI) January 14, 2020
What’s more, the government assures that the airline has ‘inner strength’.
Air India has launched/announced 12 international flights since 1st of April 2019 and this is indeed a tremendous achievement as well as a magnificent contribution towards international travel from/to India. This also shows the tremendous inner strength of the airline
— Ashwani Lohani (@AshwaniLohani) January 15, 2020
Inner strength though has been insufficient to finance new engines the airline doesn’t have in stock, which has caused them to ground 12 other Airbus narrowbodies.
Here’s what it’s like flying Air India when they don’t spend money to fix the air conditioning.
— ANI (@ANI) July 3, 2017