Air India: should we shut it down?
Imagine yourself as the chief of an airline company. Here’s how things look there at a glance:
- You’re running an accumulated loss of 200 billion rupees (about $3.6 billion)
- You employ some of the best-paid pilots in the world. They have been known to go on strike whenever they want.
- You have 27,000 employees and 122 airplanes, the highest ratio of employees to aircraft in the world.
- You’ve been losing money for years.
You run Air India.
Newspaper reporters have been writing for years about who and what are responsible for this state of affairs. Columnists have rumbled on at length about why things are as they are. What nobody has asked: Why is Air India flying at all?
If the Maharaja is grounded, thousands of people would lose their jobs. The government plans to spend $5.8 billion over the next eight years to keep the airline afloat. But in a country with malnutrition worse than the sub-Saharan Africa, wouldn’t this be better spent elsewhere? Consider this:
- An Air India pilot earns as much as 800,000 rupees per month (about $14,500) plus $2,000 as a flying allowance, a bonus for flying (essentially, a bonus for doing what they already get paid to do). His counterpart at the erstwhile Indian Airlines — now part of Air India — earns 400,000 to 500,000 rupees (about $7,280 to about $9,100) a month, plus $1,200 per month as a flying allowance. Pilots from outside India who get jobs at Air India earn more.
But nearly 500 pilots are on a strike for parity of pay between Air India and Indian Airlines and who will fly the latest planes.
This is what the government is paying for. Rather, it is what the government is forcing Indian taxpayers to pay for. Imagine the alternative: instead of giving money away, India could just shut down the airline.
Possible gains include:
- Happier customers. Air India is hardly known for world-class service.
- Happier competitors. India’s other airlines can’t rely on the same kinds of subsidies, and they have financial problems of their own. They might appreciate some redirected revenue.
- Happier taxpayers. The billions now spent on Air India could help reduce India’s fiscal deficit, or be spent on the infrastructure, education and health programmes India so sorely needs.