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Air India pilots back, but no end to crisis

Jul 05, 2012 09:47 AM IST Business Business

New Delhi: The Air India pilots have ended their strike, but the airline remains in crisis. After 58 days of strike and flight cancellations, the national carrier made a loss of over Rs 600 crore.

The pilots' apology will not undo the damage. Thousands of passengers were disgruntled, many of whom swore never to travel in Air India again. The airline is critical. A conservative estimate by the Civil Aviation Ministry puts the operational loss due to the 58-day strike at over Rs 600 crore but it's far more.

Fourteen of Air India's new Rs 1,000 crore Boeing 777 aircraft sat grounded. The total loss due to this works out to over Rs 154 crore in EMI, parking and insurance charges.

Air India's market share has severely been reduced. It was selling about 4,000 seats a day before the strike - this got cut down to just 1,000.

Sources within Air India say the airline has lost 75 per cent market share in the international market. The revenue lost over Rs 500 crore.

Lucrative flights to Toronto, Hong Kong, New Jersey, Osaka and Seoul have been cancelled. These were the routes where Air India had begun to pick up traffic but the advantage has now been lost to younger more aggressive gulf airlines.

Burdened with loans and dues worth Rs 67,520 crore, losses at over Rs 20,320 crore recovery will be tough. The damage to the Maharajas bran value may never be restored.

The timing of the strike was criminal. It came days after the government promised a Rs 30,000 crore bailout. Sources say the divisions with Air India have widened further. With the management not looking in control, many see this as calm before another turbulence.