Beleaguered Air India is seeking another $309MN from the Indian government to pay off vendors, further scaring away potential investors.
The Indian government, which currently owns a 76% stake in Air India, has been actively courting investors to buy its stake. Thus far, no one has stepped up. And is it any wonder when the airline cannot survive without constant bailouts (and is not even surviving all that well…)? Remember, this is not the first bailout in 2018. Air India received about $100MN earlier this year as well from the national government.
But the government has no plans to stop the flow of money. Air India is a huge source of employment and national pride and will not go under. But Reuters reports that three banks and two aircraft leasing firms served default notices on Air India last month. More banks are on the brink of doing the same.
Consider this airline a textbook example of mismanagement and a spotlight on the peril of propping up a national airline. While the debtors will be paid back, it is the Indian people who are suffering the consequences of such mismanagement.
CONCLUSION
Air India has a great route network and is a key Star Alliance partner for connectivity on the Asian subcontinent. I am rooting for Air India to flourish. But frankly I don’t see how. Air India seems destined, like her sister Alitalia in Italy, to be fundamentally unable to reach profitability.
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my fantasy wish would be for Vistara to buy-out AI, and have Vistara as the Star carrier for India instead of AI.
SAA is another basket case, but luckily for them, so are most of their neighbors.
the most interesting development for Star lately is the massive growth of Avianca Brasil, going from a totally regional puddle jumper to head-on challenging LATAM on trunk routes like MIA-GRU.
And speaking of MIA-GRU, Star seems to be on a perpetual merry-go-around in terms of who operates it –
UNITED ….. then VARIG ……then TAM …….. and now AVIANCA
There are two serious problems facing AI: 1) the fact that for decades, it was used as a jobs/spoils program for the government to hand out favors to the politically connected, and 2) any attempt at privatization or serious reform will be met by public unrest from the unions, who are still a powerful force in India, and historically the government has preferred to appease these protests rather than hold firm. Sadly I think you will see a semi-permanent, Alitalia-like situation of new Five Year Plans and bailouts every 6 months.
On a very side note is there ever availability on air India from Ord to Delhi in j? I am kind of keen to try it (although the alternate is the one good way I can find to spend my aa miles -flying q suites).