On 28th June, the Cabinet Committee on Economic Affairs gave its “in-principle” approval for a “strategic sale” of the central government’s ownership share in Air India to a private company. Finance Minister Jaitley justified the decision to privatise Air India by claiming that it is a waste of public money to keep operating this loss-making airline.
The Air Corporations Employees’ Union (ACEU) has issued a statement that Air India, which had been making profits till 2007, was deliberately turned into a loss-making entity by the “bungling and disastrous experiments of successive governments”. It condemned the Cabinet for approving privatisation at a time when an investigation is being conducted by the Central Bureau of Investigation (CBI) into the alleged irregularities that led to the losses on Air India’s books.
The argument that Air India is a drain on public finances and therefore needs to be privatised is spurious for several reasons.
First of all, if the burden of debt servicing is excluded, then Air India made an operating profit in 2015-16 and 2016-17. Its employee-to-aircraft ratio is 106, second only to Indigo Airlines, which operates a much smaller fleet. Air India's passenger load factor has improved consistently over the years and is equal to the worldwide average for the airline industry. It is also a fact that numerous private airlines have accumulated losses since the Indian airline industry was opened up for private players in 1992. Companies that have gone out of business include East-West, Air Deccan, Damania Airways and Kingfisher Airlines.
Secondly, Air India’s outstanding debt of over Rs. 50,000 crore is not a result of inefficient operation. It is the result of three deliberate government decisions taken over the past decade. The first of these was the decision for Air India and Indian Airlines to together buy 111 aircrafts in 2005-06, far in excess of their requirement. The requests by these airlines to expand their fleet had been turned down for many years, enabling private airlines to expand their market shares. Then suddenly, the decision was taken to buy many more planes than was needed, at an enormous cost of Rs. 70,000 crore, from the American Boeing and European Airbus companies. The manner in which the deals were rushed through points to the possibility that it was part of a secret understanding linked to the Indo-US nuclear deal.
The second disastrous decision was the hasty merger of Indian Airlines and Air India, one year after the fatal bulk purchase of aircraft. The third was the adoption of an “open skies” policy, which hit Air India’s international operations severely and benefited foreign airline companies.
All these facts show that no matter whether it is the Congress Party or BJP at the helm, central government policy has been aimed at preparing conditions for the privatization of the state-owned airline, by turning it into a loss-making enterprise. The reason why they have done so is precisely because of the enormous profit potential it offers to the new private owners.
Air India has about 15 percent share of the Indian market, which is the fourth largest civil aviation market in the world. It also has vast land holdings, including more than 30 acres of prime land in central Mumbai and the iconic headquarters building on Marine Drive, which alone is valued at over Rs. 1600 crore. It has properties in Delhi, London, Hong Kong, Nairobi, Tokyo and Mauritius. In addition, it has access to prestigious parking slots at every major international airport. It has three very profitable subsidiaries. It also has its own maintenance and repair centre, which gives it cost advantage over most other airline companies.
The decision to privatise Air India is not motivated by a desire to cut down public losses, as is being claimed by the Finance Minister. It has nothing to do with public interest. It is motivated by the greed of Indian and foreign monopoly capitalists to reap enormous private profits at public expense. They want to grab hold of precious assets worth lakhs of crores of rupees, built out of public funds, by paying just a few thousand crores.
A pertinent question is whether profitability should be the only criterion to decide whether Air India must be privatized. What about the interests of those living in small towns and remote regions of the country who are being served only by Air India today? They will not be adequately served, or will face much higher prices, if all air transport is in private hands.
When India’s airline industry was nationalised in 1953, the stated reason was to ensure the development of air transport in all regions of the country at a reasonable price. The experience of private airlines since the 1990s has shown that they concentrate their operations in the most crowded routes because that is where they can make maximum profits. In other words, state ownership is necessary in order to fulfil the need for balanced regional development. To cite the lack of profitability as a justification for privatising the only state-owned airline means to abandon all responsibility towards fulfilling the social need of providing air connectivity to all regions.
It can be concluded that the privatisation of Air India is not only against the interest of its workers but also against the general interest of society. It is driven by the greed of capitalist monopolies. The struggle of the workers against privatization is entirely just. It deserves the support of all.