Can Air India afford this? Amartya Sen travels for free 21 times in 4 years
Civil Aviation Minister Hardeep Singh Puri has said time and again that considering Air India's financial woes, the choice is between privatising or shutting down the airline
Nobel laureate and Bharat Ratna Amartya Sen has travelled for free on Air India 21 times in four years, from 2015 to 2019.
This begs the question: can the debt-laden national airline, which has not made profits since its merger with Indian Airlines in 2007, afford to be such 'large-hearted'? Especially when it has had to meet the whims of public servants over the years, copping one financial blow after another over the years. Especially when it already runs several concessionary schemes. Especially when the Covid-19 pandemic has devastated the aviation industry across the world. Especially when it is bound for privatisation.
Air India, in a Right to Information (RTI) reply to India Today, said that the procedure for issuing free tickets to Bharat Ratna awardees was circulated by the erstwhile Indian Airlines on August 25, 2003. Atal Bihari Vajpayee was at the helm as prime minister at that time.
According to a Times of India report in 2003, the then Civil Aviation Minister Rajiv Pratap Rudy said that the government was looking to rationalise the discounts offered to senior citizens and students while pledging to offer lifetime free travel on both domestic and international routes to the Bharat Ratnas. He pointed out that Indian Airlines and Alliance Air were losing Rs 60 crore per year at that time owing to concessions for senior citizens and students.
According to the RTI reply, the decisions was taken as a mark of respect to the Bharat Ratna awardees for their outstanding contribution in their respective areas. The circular added that these eminent personalities would not need to complete any documentation for obtaining complimentary tickets while travelling by Indian Airlines and Alliance Air. The counter staff were clearly directed to not insist on any proof of identification. The applicable taxes and other levies were to be borne by Indian Airlines.
Amartya Sen received the Nobel Prize in 1998, followed by the Bharat Ratna in 1999. Image courtesy: Wikimedia Commons/Fronteiras do Pensamento
The circular further said that these complimentary tickets were to be issued in economy class but subsequently upgraded to executive class. The validity of such tickets was to be three months from the date of issue.
Apart from Sen, only three other Bharat Ratna awardees are still alive: CNR Rao, Lata Mangeshkar and Sachin Tendulkar. A total of 48 people have so far been conferred the Bharat Ratna, which is India's highest civilian award and comes with several perks, including eligibility for diplomatic passports, treatment as state guests during travel within the country and placement in the official order of preference even ahead of chief ministers and governors outside their respective states.
Air India mentioned that Sen was the only Bharat Ratna awardee to have taken advantage of this scheme. The airline, however, could not ascertain the monetary value of Sen's free travel as, according to it, the fare prevalent on the date of travel had not been stored.
A spokesperson for Sen refuted claims that the economist took the benefit of the free travel provision offered to the Bharat Ratna awardees, saying that a special Air India travel card was given to Sen by Vajpayee to celebrate the Nobel prize. It entitled him to free travel to anywhere within the Air India system. He was also given a special card for free travel on AC-first class on the Indian Railways. The spokesperson added that when Sen received that Bharat Ratna in 1999, there was no provision for free travel for the awardees, and added that the Nobel card was for first-class travel, while under the offer for Bharat Ratnas, tickets were to be issued in the economy class and later upgraded to executive class.
For all the protest against Air India's claims, however, Sen's spokesperson never denied that the Nobel-winning professor availed of free travel on the national carrier. One way or the other, the eminent economist did, therefore, travel free.
Now, one may not expect someone being provided rich perks by the government to forgo them of their own accord in order to save money for the government. However, was it prudent for the government to give out such perks in the first place, and more so, continue them, when the airline's financial troubles have been well-documented?
Remember, Air India also offers generous concessions for several different categories of people ranging from armed forces personnel, gallantry award winners, senior citizens, students, differently-abled people, cancer patients and Arjuna awardees, stretching its finances even further in the process.
Indian Airlines planes at the Delhi airport. Image courtesy: Wikimedia Commons/Flickr/Aeroprints.com
Civil Aviation Minister Hardeep Singh Puri said in a reply in Lok Sabha on March 25, 2021, that according to provisional figures for the financial year 2020-21, Air India was expected to incur a net loss of Rs 9,779 crore. The Economic Times reported that the national carrier was estimated to lose Rs 9,500-10,000 crore in the financial year 2020-21 -- its highest since the 2007 merger, beating the record Rs 8,500 crore loss in 2018-19. As of March 2019, Air India reportedly had a total debt of Rs 60,074 crore.
Air India Chairman and Managing Director (CMD) Rajiv Bansal had said that the airline's losses could be around Rs 8,000 crore in FY21. Its cash losses are expected to rise 80% on year to Rs 6,000 crore in FY21.
Air India's financial troubles have not been new. According to another Economic Times report, from March 31, 2007, to March 31, 2009, Air India's losses went up over 800% from Rs 771 crore (Air India + Indian Airlines) to Rs 7,200 crore.
What were the reasons for this enormous increase in losses? The ET report attributed them to the way Air India and Indian Airlines were merged, aircraft were leased or purchased, capacity gifted away to foreign airlines under bilateral agreements, flights withdrawn from profitable routes, pilots not sent for proper training, and relinquishing of ground-handling services in Bangalore and Hyderabad and plans to do so elsewhere.
According to a separate RTI response by Air India, there were outstanding dues of over Rs 822 crore towards VVIP charter flights as of November 30, 2019. Also, Rs 9.67 crore towards evacuation operations and Rs 12.65 crore towards transporting foreign dignitaries were pending. Alarmingly, Rs 526.16 crore was due to the airline on account of tickets taken on credit by government officials as of March 31, 2019. These factors, apart from high interest rates, fluctuating exchange rates due to a weakening rupee and competition from low-cost carriers put a burden on the airline's finances.
Late in 2019, the airline announced that it would stop issuing tickets on credit to officials from government agencies like the Central Bureau of Investigation, Enforcement Directorate, Information Bureau, Central Labour Institute, Border Security Force and Indian Audit Board, each of whom owed the airline more than Rs 10 lakh, according to an IANS report.
Alliance Air used to offer low-cost feeder services for Indian Airlines. Image courtesy: Wikimedia Commons/Flickr/Aeroprints.com
Air India had to sell its planes to finance the debt. It had to sell three Airbus 300s and a Boeing 747-300 Combi in March 2009 for $18.57 million. It had sold 13 aircraft in 2008. A total of 21 aircraft were sold off between 2007 and 2009 for $451.88 million, the Financial Express reported.
In 2009, Air India had made the Frankfurt airport its international hub for onward flights to the US from India but had to shut it down the following year due to high operating costs.
The Comptroller and Auditor General (CAG) had slammed Air India's purchase of 111 aircraft in 2005-06 and blamed it for the company's financial woes. The CAG said that the decision to buy 68 Boeing aircraft for Air India and 43 Airbus planes for Indian Airlines was ill-timed and driven from the top, which resulted in the airline accumulating a massive debt of Rs 38,423 crore as of March 31, 2010, the Free Press Journal reported.
Regarding the Covid impact on the airline, Puri said in Parliament that though Air India had operated Vande Bharat Mission (VBM) and charter flights during the lockdown, its revenue stream did get affected due to the complete stoppage of flights during the lockdown, while fixed costs had to be incurred.
The minister said that during 2020-21, there was no equity infusion into Air India. However, the equity infusion during financial years 2019-20, 2018-19 and 2017-18 were Rs 1 lakh, Rs 3,975 crore and Rs 1,800 crore respectively.
Puri added, "In FY 2020-21, GoI Guarantee support of Rs 964 crore has been provided to Air India which has helped them to raise new working capital loans from Indian banks. Further, the government has also extended the existing GoI Guarantee of Rs 6,693 crore for working capital requirements and $819 million for refinancing of aircraft bridge loans. National Small Saving Fund (NSSF) loan of Rs 4,500 crore has also been provided to Air India in FY 2020-21."
The minister has said time and again that considering Air India's financial woes, the choice is between privatising or shutting down the airline. Once the airline re-enters private hands, as it looks poised to do, these generous 'welfare' schemes could well be done away with. A private player, driven by hard-nosed profit and a zeal to turn the fortunes of the cash-strapped airline around, is expected to be ruthless in this regard.