The government has thoroughly analysed the failed sale process of last year and is making changes in the privatisation process based on those lessons
Even as Air India’s CMD Ashwini Lohani has asked the government to financially support the airline till it finds a suitable buyer, the national carrier’s domestic market share has fallen to its lowest level this year.
According to data compiled by the Directorate General of Civil Aviation (DGCA), Air India’s domestic market share in November was 12.1 per cent—its lowest level in 2019. The airline carried 1.6 million passengers that month. The decline in Air India’s market share came even as the number of passengers it carried in November 2019 was 14 per cent higher as compared to the same moneth last year.
Air India’s plummeting market share is significant for various reasons. The Modi government has made it explicitly clear that it is not interested in running the airline. Civil Aviation Minister Hardeep Singh Puri told Parliament recently that “the airline would have to be closed down if not privatised.” The government believes that it doesn’t have the funds to inject in an airline whose net losses touched Rs 8,400 crore in 2018-19 despite improvement in operational parameters. The airline is also saddled with a debt of Rs 58,351 crore. While such statements may hurt Air India’s final selling price and prevent the government from realising the maximum disinvestment value, it could also have a debilitating impact on the moral of its employees in the times to come. Lohani in his public post on social media had said, “Air Indians are indeed putting in their best even at this critical juncture and that is very appreciable. Air India
needs to survive till it is sold. I wonder why is it so difficult for this appreciation to sink in and also that in this environment of disinvestment, expecting a radical improvement bordering on a turnaround is an impractical thought. That output can be given sans inputs is a grossly impractical thought.”
Air India’s declining domestic market share came at a time when there was a window of opportunity to fill the void left by the closure of Jet Airways on both domestic and international routes. Jet Airways shut operations in April this year. In the first three months of 2019, an estimated 3.6 million people flew Jet Airways domestically. In effect, India’s airlines now had the opportunity to tap these passengers with one less airline to compete with.
But DGCA figures show that Air India
was in no mood to capture these passengers. In the second quarter of the calendar year 2019, the first period without Jet Airways, Air India’s domestic ridership rose by just two lakh. Indigo, meanwhile, saw a jump in ridership by 1.5 million in the second quarter as compared to the first one. Spicejet and Go Air together saw their ridership rise by almost a million in this period. In the third quarter, Air India’s ridership fell by two lakh passengers.
While Indigo saw a marginal drop in quarterly ridership when it grounded its Airbus A320 Neo planes, both Go Air and Spicejet increased their market share. Air India, meanwhile, continued losing its foothold and that is evident by its November market share. The government’s refusal to pro-actively run the airline could plunge it further into the abyss.