Air India is a Symbol of the State - Save it - CAG
THE CAG's latest report is on India's ailing maharaja – Air India and as every one knows, the CAG has found out that the maharaja is on the deathbed. CAG says, “The Airline has a debt liability of Rs. 38,423 Crores as on 31 March 2010. Aircraft acquisition has contributed predominantly to it. Government must lay down a road map for liquidating the liability within a short span after making a realistic assessment of revenue generation capacity. Piecemeal infusion of small amounts is merely going to at best delay the certain closure of the Airline.
Other comments of the CAG:
MoCA and Government must recognise that AI is the National Carrier. In very many ways, it is a symbol of the State.
The airline is in a crisis situation. Salary payments and ATF obligations are becoming difficult. If the airline has to survive, the management and employees will have to set personal interests aside and undertake some harsh decisions.
Market surveys of customer perception revealed that Air India was no longer a preferred brand, and that it was not adequately oriented towards customer satisfaction. Expenditure on publicity and sales promotion was negligible.
Audit is constrained to comment on the speed at which the acquisition process proceeded. A programme, which was under consideration from 1996 and took eight years to progress upto the Government level for purchase of 28 aircrafts suddenly picked up speed. Between August 2004 and December 2005 the proposals were formulated by AIL, approved by its Board, examined and approved by MoCA, the Planning Commission, the Department of Expenditure, PIB, EGoM and also the CCEA. Government conveyed its approval on 30 December and the Contract was signed by AIL with Boeing on the same day. From receipt of the proposal by the government to the signing of contract with government approval, by AIL with Boeing took seven months.
Dedicated cargo freighter operations started in June 2007/ August – December 2008 by converting four passenger aircraft (two owned and two leased) into freighters at a cost of Rs.168.30 crore. This ended up incurring losses of Rs.270.62 crore and were suspended from September 2009.
Cash profits and marginal net profits in 2004-05 and 2005-06 turned into substantial cash losses and net losses. The net worth of the entities, which was negative in 2004-05, was made positive in 2008-09 through a revaluation of fixed assets by Rs. 8,028 crore. Even such revaluation could not reverse the trend and it became hugely negative in 2009-10;
CAG Recommends:
All free travel by AI officers, on duty or leaves in business/ first class should be prohibited. All existing facilities offered in this regard should be withdrawn till AI's financial conditions improve dramatically. Given the life-threatening crisis that AI is currently facing, top and middle management in AI should set an example in this regard.