THE BIG GOOFS
For Air India, the past decade was marked by missteps that further eroded its finances
BUYING SPREE
Acquisition of 111 aircraft for Rs 70,000 crore despite the airline’s poor financial health
In December 2005, the Manmohan Singh government approved the purchase of 68 aircraft from Boeing. A year later, Indian Airlines signed up for 43 aircraft from Airbus Group SE
The decisions have come under the scrutiny of the CAG and CBI. The CBI’s FIRs in May 2017 charged former aviation minister Praful Patel and unnamed officials with ordering the purchases without transparency, causing immense loss to the exchequer
MERGER MESS
The Air India-Indian Airlines merger in 2007 under the brand name Air India was aimed at leveraging synergies, but it only created another languishing entity
In 2002-03, the combined entity of Indian Airlines and Air India lost just Rs 63 crore. Losses shot up to nearly Rs 7,000 crore in 2010-11
LEASING LOSSES
The CBI also raised charges of irregular leasing of aircraft by Air India without a proper route study and marketing-pricing strategy
The CAG’s 2015 report pegged losses from leasing of aircraft at Rs 405.8 crore between March 2011 and May 2014
DISTRESS SALE
A CAG report tabled in Parliament in March 2017 said Air India incurred a loss of over Rs 671 crore by selling its five Boeing 777-200 long-range aircraft to Etihad below cost price
The losses would be higher if we add Rs 324.6 crore paid as interest on loans to procure these aircraft
Only 17 of the airline’s services recovered costs in 2015-16; 36 services ran into losses —M.G. Arun