Private rivals trim Indian Airlines wings

Private rivals trim Indian Airlines wings

By Rahul Sharma

NEW DELHI (Reuter): Indian Airlines (IA), India's biggest airline, is canceling flights because it doesn't have pilots to fly the aircraft.

Last month, in a major exodus, 24 pilots flying the state- owned largely domestic Indian Airlines (IA) fleet of Boeings and Airbuses quit at the same time, bringing more grief to the already stricken airline.

Pilots have been leaving IA in trickles since private airlines began operations in 1992 -- mostly for higher wages and better perks. Of the 607 pilots flying IA's fleet of 54 B-737s, A-320s and A-300s, altogether 183 have left.

Industry experts say the latest exodus will hurt IA more than ever before.

IA's woes began three years ago when its 40-year-old monopoly ended after India allowed private airlines as part of its far- reaching economic reform program.

The stodgy monopolistic airline known for its poor customer relations and oft-delayed flights faced stiff competition from more than a dozen small private airlines which snatched IA's customers with better service and on-time flights.

The airline lost passengers and its market share dipped on major routes. It also lost revenues and ran up huge cumulative losses of over 6.0 billion rupees (US$190 million).

Last month it all came to a head when the 24 pilots announced they were leaving. IA cried foul and accused private airlines of pinching its pilots, a charge they stoutly denied.

P.C. Sen, IA's managing director, said the pilots were expected to give six month's notice, which they didn't. "It's like jumping bail," he added.

"If they are dissatisfied with Indian Airlines, what can we do?" asked a senior private airline official who declined to be named.

IA is now recommending an increase in retirement age and a revised wage package to hold its pilots. It also plans to increase the number of instructors to train junior pilots quickly.

But pilots or no pilots, IA's finances are in a mess. Although its revenues have increased in the past years, losses continue to mount. In 1993/94 financial year (April March), losses were 2.94 billion (US$93 million) on revenue of 18 billion ($571 million). In the current 1994/95 (April/March) financial year, IA hopes to earn over 22 billion rupees ($700 million) and hold its annual loss to 1.2 billion rupees ($38 million).

"It will depend on whether we can keep our market share and what we pay for fuel," said Sen.

He said IA could save 2.0 billion rupees ($63 million) if it paid the same for fuel as international airlines.

"We pay $361 per kiloliter plus sales tax. Others pay $260 and no tax," said a senior official.

The government has yet to decide whether to give the tax breaks to Indian Airlines and private domestic carriers.

The private airlines have taken 25 percent of AI's market share.

In the first four months of the 1994/95 financial year, private airlines doubled their market share on trunk routes over the same period last year, carrying more than 1.6 million passengers.

IA carried 2.9 million passengers against 3.1 million in the same period, dropping 8 percent of its market, the airport authority said.

India last month announced it was freezing free imports of large aircraft by private airlines. But as the laws say they need to have at least three aircraft, some of them have been allowed to bring in a few.

Last month Civil Aviation Minister Ghulam Nabi Azad told parliament the decision stemmed from overcrowded air-corridors and congestion at airports.

But the five biggest private airlines -- East West, Damania, ModiLuft, JetAir and Sahara -- accused the government of bias towards IA and said the freeze would hurt growth as they planned to import as many as 20 new aircraft.

Seventeen other firms permitted to launch new airlines are yet to get off the ground and begin importing aircraft.