Fresh trouble is brewing for state-run carrier as its employees threaten a strike and the civil aviation ministry pushes the airline to get its financial situation under control.
Employees of the money-losing national carrier are protesting the non-payment of salaries for the past two months. According to local media reports, nearly 8,000 staff members say they will walk off the job Jan. 14 if management fails to pay salaries and the sustenance allowance on time.
The sustenance allowance and productivity-linked incentives are meant to cover expenses, such as meals and transportation, when flight crews are on layover abroad. Cabin crew, who receive a major portion of their salaries from the sustenance allowance, have been struggling as they travel frequently to international destinations.
On Monday, at least 100 flight attendants failed to report to work, resulting in the cancellation of some international flights.
India’s new civil aviation minister, Ajit Singh, criticized the state-run carrier yesterday, saying the government cannot keep pumping money into the ailing airline.
“Air India will have to pull up its socks,” Singh said.
He added the government has an obligation to sustain the airline because it is a state-run company, but “it will have to become competitive and restructure its costs in line with the industry as a whole because government cannot keep pouring money.”
During the past two years, the government has injected about $386 million into the cash-strapped national carrier and promised another $232 million this fiscal year, which ends March 31.
Air India is in the process of restructuring $3.4 billion of its total debt of more than $7.6 billion.
India’s aviation industry has been reeling from the effects of spiraling jet fuel costs, plummeting profits and high debt.
Privately owned Kingfisher Airlines, controlled by billionaire Vijay Mallya, has been among the hardest-hit. It canceled hundreds of flights late last year and grounded aircraft to preserve cash.
The airline had $1.25 billion of debt at the end of June, and its auditors recently said it would need to raise funds immediately to continue operations. Kingfisher had sought government help to extend the time for repaying banks.
But Singh yesterday ruled out any bailout for Kingfisher.
“Banks have to go by the norms set by Reserve Bank of India. Unless they are satisfied with business plan, how can they lend money? The government is in no position to bail out a private enterprise,” he said.