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Air India Pushed Into Losses, Divestment Done To Save Public Money: Minister
Merger of Air India and Indian Airlines led to downfall of national carrier, says Scindia

Three government-owned airlines, Air India Limited, Air India Express, and Alliance Air reported a combined net loss of 7,403 crores during the March-December 2021 period, civil aviation minister Jyotiraditya Scindia said on Thursday.

Modi government sells Air India to Tata Sons — Quartz India
Image: Quartz

He said the highest loss was incurred by the now privatized Air India with Rs 9,373 crore loss in 2020-21 and Rs 6,927 crore in 2021-22 (up to December 2021). Air India Express incurred Rs 184 crore profit in 2020-21 and Rs 161 crore loss in 2021-22 (till December 2021), he said during the Question Hour.

 Under attack from the opposition over the sale of Air India to Tata Group, Civil Aviation Minister Jyotiraditya Scindia on Wednesday hit back and accused the UPA regime of saddling the then profit-making national carrier with a huge debt burden.

“The merger of the two national carriers, along with the purchase of new aircraft and the liberalization of bilateral rights are the reasons for the downfall of Air India,” Scindia said in the Lok Sabha on Wednesday.

The minister recounted 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 cost of around Rs 55,000 crore which pushed the national carrier into deep debts,” Scindia pointed out.

Disinvestment Deal

In January, the government handed over Air India and Air India Express to the Tata Group following the completion of a successful divestment process. Alliance Air, a regional airline, is still being run by the government.

In a separate response at the Lok Sabha, the minister of state (civil aviation) VK Singh said that airline losses were nearly doubled from 10,212 crores in 2018-19 to 18,426 crores in 2020-21.

Singh also said that the escalation of aviation turbine fuel (ATF) due to the ongoing Ukraine conflict may further adversely impact the financials of airlines.

The cost of ATF has risen from 76.1 a liter on 1 January 2022 (in New Delhi) to 110.7 a liter on 16 March 2022, Singh added.

He said the losses of 14 years had accumulated to ₹ 85,000 crores. The equity infusion had cost the government ₹ 54,000 crores. The grants to the airline totaled ₹ 50,000 crores. The net debt of ₹ 66,000 crores had left Air India staring at a chasm of ₹ 2.5 lakh crore.

“It is under these circumstances the Prime Minister took a decision to put an end to these losses. He decided on the disinvestment of Air India to protect the money of 135 crore Indians. They put it to good use through schemes such as Ujjwala, Jal Jeevan Mission,” Scindia said.

On concerns raised by members, Mr. Scindia said the shareholder agreement with the Tatas mentioned that there will not be any employee layoffs during the first year.