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Air India and OMC issues to be resolved soon.

Equity Right Air India in grave peril.

Air India and OMC issues to be resolved soon.  

It is distressing to witness the acute downfall of Air India. The airlines was once considered to be one of the best and largest carriers in the country. Air India used to conduct international flight operations to over 60 countries across 4 continents. The number of destinations has now curtailed to 43 cities in 31 countries.

 The growth of Air India 

Air India has reportedly been conducting domestic operations in 55 cities as of July 15th 2019. The company rendered services to over 94 domestic and international destinations. On 11th July 2014, Air India received the honour of becoming the 27th member of Star Alliance. Star Alliance established on May 14th 1997, with the idea of providing easy connections to every destination on the planet. It is presently under the leadership of CEO Jeffrey Goh. Star Alliance has it’s headquarter situated in Frankfurt am Main Germany.

Gradual decline of the airlines

           Air India  eventually became a public holding after World War II. It was founded by J.R.D. Tata and initially commenced as a private company as ‘Tata Airlines’ in 1932. The company renamed itself as ‘Air India’ after turning into a public limited company. Persistent efforts were made to privatize Air India in 2000-01.  After a merger with Indian Airlines, excruciating losses incurred since 2006.

         The public sector Oil Marketing Companies (OMCs) are at variance with Air India Ltd. The public sector OMCs comprises of Indian oil Corporation, Bharat Petroleum Corporation Ltd and Hindustan Petroleum Corporation Ltd. They have restrained fuel supply to Air India Ltd at six domestic tiers two airports. This was due to non-settlement of dues accounting to ₹5000 crores. The airline company would have to give it in writing as to how the company plans to remit its dues. Until then, the OMCs had decided to halt fuel supply to this company.

Air India’s proposal denied

   It is unlikely that Air India will pay off its entire debts all at once. The company has been undergoing a state of cash crunch lately. Therefore, it poses a great deal of challenge as to how the company would manage to surpass this phase. A proposal was made by Air India, offering to pay an initial amount of ₹60 crores out of ₹5000 crores. The OMCs, however, declined this proffer. The company that was once reaching the pinnacle of success, is now struggling to sustain its presence. Air India has been incurring huge losses year after year. Therefore, the government is showing a resolute stance towards the privatization of Air India.  GOI has reportedly been looking for a private buyer so as to turn this loss into a dis-investment opportunity.

Conclusion 

          Despite the current adversities, Air India Ltd is making continual efforts to revive its robust state. The airline has suggested the government to sell Air India Express and Air India SATS. Air India Express is a low-cost airline meant to serve customers with moderate means. The company is a subsidiary of Air India Ltd and it’s headquarter is located in Kochi, Kerala. As for the Air India Singapore Airport Terminal Services (SATS), it renders ground handling services across several airports throughout the country. This suggestion is to be an initial step towards the divestment process that is to be taken up by the government. With perpetual efforts and attempts to improve the current condition, the company will hopefully find its way back. Air India and OMC issues to be resolved soon. 

 

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