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How Air-India loses customs...

How Air-India loses customs...

I have in the past mentioned the failure of the national carrier Air-India to derive the maximum benefit out of the boom in air travel. Post the 1990s the massive increase in traffic was initially grabbed by the European giants like Lufthansa and British Airways. Surprisingly, despite bulk of this traffic moving towards the US, large American airline companies have not tapped this business. They have been content to leave the huge potential to be exploited by their partners in the airline alliances like Star Alliance.

After 2000, synchronising with the improvement in technology to fly over long distances with bigger aircraft, countries in the Gulf region focused on the airline business. These countries created productive infrastructure on the ground and invested massively in sophisticated aircraft.  With vast areas of land available in these desert kingdoms, in quick time sophisticated ground facilities were created. In quick succession Emirates, based in Dubai, Etihad in Abu Dhabi, Gulf Air in Bahrain along with their older counterparts of Saudi Airlines and Kuwait Airlines, have been investing massively and winning handsome custom. With much lower airport landing and takeoff costs and with the ability to fly non-stop over long distances, these airlines have been able to earn a lot of custom from Indians travelling to the US, African and European countries and other destinations.

Mounting losses with the consequent inability to invest continuously in the acquisition of new aircraft in large numbers, Air-India has been missing out this boom. Many of the bilateral agreements with several nations have been benefiting its partners and not so much Air-India. The corporation is yet to come out of the effects of its merger with Indian Airlines, loading it with an enormous under-employed workforce, diversified aircraft and ineffective management with bureaucratic control. Its once huge market share within the country has suffered severe erosion. With the recent new policy that permits newer entrants in the business to fly overseas, this competition is bound to intensify further.

Despite the large custom from South India, Air-India doesn’t offer direct, non-stop flights to Europe/US. The passengers are ferried to Delhi/Mumbai for such direct flights entailing higher travel time.

The policy of continuous recapitalisation by the government has mostly gone to keep the airline afloat. A bold new plan to revamp the finances and infusing substantial fresh capital can still enable this Indian icon to regain some of its past glory.

 

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