May 29, 2012
The Indian government has decided to examine the route profitability of debt-strapped Air India, as the strike by pilots of the national carrier entered its 22nd day and losses rose to more than 3 billion rupees ($54 million).
“Civil Aviation Minister Ajit Singh has decided to set up a committee to examine the route profitability of Air India and make its recommendations to rationalize the same, keeping in view the overall objective of profitability,” a ministry official says.
The official says the decision was made after the civil aviation minister reviewed the status of flights and services being provided by Air India on a number of domestic and international routes that are not profitable.
The committee will analyze criteria for withdrawal of routes and economies of scale of the sectors being operated.
The national carrier currently has a debt of more than 450 billion rupees ($8 billion) and accumulated losses of more than 250 billion rupees.
Air India canceled 5.2% of all its domestic flights in April, the latest government documents show, deepening the credibility crisis faced by the national carrier.
“Air India recorded the highest number of cancellations amongst all domestic carriers in April, though there were hardly any labor or financial crises during that month,” says the official in the civil aviation ministry.
Meanwhile, the strike continues by more than 300 pilots of the Indian Pilots Guild (IPG).
The work stoppage started on May 8 to protest the company’s latest move to provide conversion training to pilots from Indian Airlines for the 27 new Boeing 787 aircraft that will soon join the fleet. The striking pilots argue that the decision to train pilots from Indian Airlines, which merged with Air India, would hinder their career prospects.