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.