Poor Air India. When faced with a bloated staff and sagging financial numbers, rather than trim back operations and layoff non-essential personnel, they compensated for their abnormally high aircraft to staff ratio by ordering new airplanes–27 Boeing 787s. The second carrier slated to take delivery of the Dreamliner (ANA will be first) now finds itself in hot water–there is no money to pay for the new aircraft.
The Indian government has attempted to blame Boeing, arguing the three-year delay in the program led to uncertainty and helps to explain Air India’s dire financial situation. Sorry, I do not buy it. The Boeing delay may have contributed and even exacerbated Air India’s economic condition, but you cannot blame an aircraft manufacturer for an airline that has racked up $8.32BN in debt over the last six years and is unable right now to even pay its staff. Air India made critically false assumptions, essentially concluding without extensive research that increasing passenger volume would translate to increased market share and profit. That has not occurred, and the airline now find itself insolvent and reliant on frequent tax-payer funded cash infusions just to keep operations going.
The next few months will be interesting. While the numbers suggest Air India should be put out to pasture, the Indian government has voiced its objective to keep the flag-carrier afloat–no matter how much it costs.
For more on this issue, check out this interview of former Civil Aviation minister Praful Patel–it is quite revealing and extremely interesting.