As i got the news that Maharaja Air India has been designated official carrier of the Commonwealth Games 2010 which are still an year away its fair to access whether Air India can really turn itself around. The airline today signed a Memorandum of Understanding with the Commonwealth Games Organizing Committee to be the official carrier during the Games, which is scheduled to be held between October 3 and 14, 2010. They also plan to run special charter services to accommodate sportsperson and visitors.
Putting numerous Strike by pilots and worker union which disrupt the services aside Air India is set to pose 5,000 Crore loss this year. To understand the fall of Air India one has to look at the policies being adopted by management in last decade. India is still a very competitive market for budget airline like Spice Jet and Indigo, Kingfisher and Jet carry the non-government elite. Air India fall in between them and thus lose a large market cap. Policies are still dictated by politics in the board which got sacked once, wrong aircraft were selected to purchase and routes were chosen to be flown which were more comfortable to new delhi.
Turnaround plan prepared by airline seeks a reduction in salary costs, hiving off of non-core businesses, restructuring debt and introduction of a domestic low-cost service over 18-36 months. Reducing manpower cost has already backfired with disruption of services for 4 days due to striking pilots with more loss of revenue amounting 50 Crore a day. Air India is now planning 3000 Crore equity from government as last resort.
We can say this as an moral responsibility of government as Air India what now is because of the political interference for decades, I would say once we are done with the games and situation does not improve it would be sensible to do the much overdue privatization.
You may also want to read these