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After Jet Airways, Air India Loses Rs 300 Crore In 2 Months! Here’s Why?

| Published on May 4, 2019

The scenario of the Indian Airline industry has been very dicey and difficult for the past few years. With the heartbreaking end of Jet Airways, another airline, Air India seems to be the next in line. It’s one of those airlines that form a part of the Indian heritage and has been fighting for a while to stay in the game while serving the nation. It was the first airline to step up for the majority of the employees that were left stranded after the shutdown of jet airways.

Background Check.

Air India was founded by J.R.D Tata in 1932 and was called Tata airlines back then. However, after World war II, it became a public company under Air India Limited, an Enterprise owned by the Government of India (GoI) and got renamed to its current name. Its hub is the Indira Gandhi international airport of New Delhi.

However, since 2006, when Air India merged with Indian airlines, the airline has been facing huge losses and struggling to earn any profits. It had to recently ground around 20 of its aircraft due to lack of funds to replace their engines and unwillingness to compromise customer safety. Moreover, there have been a lot of cases of flight delays and flight cancellations that add to the grievance pile of the airline.

What is the problem?

Considering all previous problems, the journey doesn’t end there. Air India is now said to be suffering more losses worth RS 300 crores considering it’s long-haul international flights from Delhi to places like Europe, the US and the Gulf. The loss is close to around Rs 6 crores daily, for the past two months, mostly on fuel used and time taken. It must be noted, oil prices are already very high and increasing usage of the same will ultimately lead to higher costs. Moreover, the losses stop the airlines from investing money in the other required areas of improvements and narrows the possibility of profits to almost nil.

The effect of Surgical Strike!

It isn’t stale news, the attack of the Indian Air force, under the order of Prime minister Narendra Modi, on the Jaish-e-Mohammed’s Balakot camps in Pakistan. It happened on February 26 and Pakistan retaliated with restricting its own airspace. Air India flies around 66 weekly flights to Europe and around 33 to the US. All of these flights are not being diverted and are taking the longer route due to unavailability of the Pakistani Air space.

The Impact

Air India is a national carrier and it’s not possible for them to stop services even though this scenario is causing a negative impact on their services.

1) Higher flying time is increasing staff and cabin crew workload and work hour
2) Ticket prices are increasing and there have been cancellation losses amounting to 2.75 crores daily already.
3) Due to more travel time, the number of flights available per day by airlines is also going down.

For example, Reuters calculated, Considering 34 flights between Delhi and Amsterdam, travel time for each flight increased by approximately 2 hours as distance increased by 22%. The calculation was done considering the initial period of February 19-26 and the current crisis period of April 3-9.

Air India has been doing its duty to the nation for years now. Which is why they have now approached the Civil ministry for Monetary help to solve their problem which is existing due to decisions and circumstances out of the control of the company. The company is looking for loss compensation and luckily, now that the Pakistani airspace is partially open, there is hope that losses would reduce and provide some relief to the worrisome Air India.

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