Vested interests sucked life out of Air India: Par panel

Two parliamentary panels have castigated the government over the precarious health of Air India, with one of them saying "unscrupulous and vested interests" had worked overtime to "suck the life out" of the national carrier.

Expressing concern over the critical situation facing Air India, the Committee on Estimates said it "cannot help but opine that unscrupulous and vested interests have worked overtime to suck the life out of this public enterprise".

"Failure to check its deterioration is nothing but utter callousness on the part of the government too," the Committee, headed by Congress MP Francisco Sardinha, said in its report in Parliament, while blaming the government for being "solely responsible for the company's financial woes".

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Pointing at the huge losses, the panel said it failed to understand "how the situation was allowed to deteriorate to this extent despite the fact that Air India was once a showpiece PSU and a matter of pride for the government".

In its report tabled today, the Standing Committee on Transport, Tourism and Culture said it was "disturbing" that Air India had been seeking financial help without even spending the entire amount allocated to it during the 11th Plan.

"The Committee is surprised to note that when the national carrier was knocking the doors of financial institutions to bail it out, it was unable to spend money it had been allocated during the 11th Plan period," the panel, headed by senior CPI(M) leader Sitaram Yechury, said in its review of the Demands for Grants of Civil Aviation Ministry.

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During the 2007-12 plan period, Air India spent Rs 25,603 crore (Rs 256.03 billion) against a total allocation of Rs 32,730.71 crore (Rs 327.30 billion), leaving an unspent sum of Rs 7,127 crore (Rs 71.27 billion), it said, adding, "This is a disturbing scenario."

Asking the government and Air India to be "very careful" while implementing its revival and restructuring plan, the Standing Committee said the "greatest challenge" which they have to overcome on priority related to "HR (human resources) issues created due to ill-conceived merger plan".

Regarding Air India Express, it said that "special attention" must be paid to this Air India subsidiary, as its market share had dwindled from 6.2 per cent in 2010-11 to 5.6 per cent in 2011-12 (till this January), as did the number of its flights and passengers carried, "resulting in increase of its losses".

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"The main reason attributable to this situation is the withdrawal of its services from the lucrative Gulf routes," the report, tabled in Parliament, said.

The Standing Committee recommended that AI Express, with a fleet strength of 21 Boeing 737-800 planes, could be "used efficiently" as a low-cost carrier in the domestic market to strengthen its business operations.

Holding the government "solely responsible" for Air India's financial woes, the Committee on Estimates asked it not to "shy away from taking care of the interest liability on its loan and payments for acquiring new fleet, if the company is to stay afloat".

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Hoping that restructuring would be carried out strictly in a time-bound manner, it said this was necessary as "much delay has already occured resulting in an unprecedented damage to the overall image and financial health of Air India".

The Estimates Committee also asked the airline to revisit its expenses judiciously and weed out unnecessary expenditure and the government to "give maximum attention" to ensure that it performed better in the years to come.