The merger of Air India and Indian Airlines, coupled with the unviable decision to purchase 111 new aircraft, donated to the downfall of Air India, says Minister of Civil Aviation Jyotiraditya Scindia.
“The merger of the two national carriers, along with the investment of new aircraft and the liberalization of bilateral rights are the reasons for the downfall of Air India,” Scindia told in the Lok Sabha on Wednesday.
Minister of Civil Aviation Jyotiraditya Scindia
The minister told how India’s flagship carrier turned from being a profitable airline into a loss-making entity.”Before 2005, Air India was making a profit of Rs 15 crore per annum and Indian Airlines was making a profit of Rs 50 crore.
These airlines were made to purchase 111 aircraft at a price of almost Rs 55,000 crore which pushed the national carrier into deep debts,” Scindia pointed out.
Liberalization of bilateral rights, at a time when Indian air carriers could not fulfill it, resulted in the airline incurring a daily loss of Rs 20 crore.
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“The accumulated losses of 14 years near Rs 85,000 crore. The equity infusion had cost the government Rs 54,000 crore, grants to the airline totaling Rs 50,000 crore and net debt of Rs 66,000 crore had left Air India staring at a chasm
of Rs 2.5 lakh crore,” Scindia said.
Prime Minister Narendra Modi
All these justifications made it unviable to fly the airline, which is when the government, led by Prime Minister Narendra Modi, decided to disinvest it.
The money that was being infused to keep the airline afloat by the government was brought to constructive use by diverting it into state-sponsored welfare schemes like Ujjwala and Jal Jeevan Mission.
To protect employees of the airline, a shareholder deal with Tata mentioned that there would be no layoffs during the first year. After the first year, workers would be offered voluntary retirement schemes along with the continuation of medical benefits.
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