Fri, May 18, 2012
Major Airlines Posting Losses
Air India, a government-owned carrier, has been dealing with a sickout from its pilots for over a week now, and the result has been the cancellation of most of the airline’s international flights. At issue is a dispute over training, which the pilot union says impacts career advancement prospects adversely. The job action has spread to 350 pilots, and the airline is losing $2.2 million a day.
The airline’s management has derecognized the pilot’s union and has fired a few of the strike initiators. The Delhi High Court has declared the strike illegal, but the striking pilots are steadfast. Air India’s Executive Pilots Association is supporting the strikers and the Society for Welfare of Indian Pilots has asked that the fired crew be reinstated.
The Knowledge @ Wharton site reports the while Air India’s problems are compounding by the day, the entire Indian aviation sector is under stress. The rising cost of fuel, service taxes and high airport charges have been affecting almost all airlines adversely. Air India is not the only carrier experiencing labor problems though; pilots from Kingfisher Airlines decided to strike over delayed salaries.
Jan Zalewski, analyst from HIS Global Insight said “Despite double-digit growth rates of passenger air traffic, five out of six private domestic airlines in India posted huge losses over 2011; this paradoxical situation is partly due to high oil prices and a depreciating rupee, but more importantly the losses are due to the highly restrictive and unfavorable operational environment for domestic airlines in India.” Zalewski suggests the government needs to adopt more favorable policies to allow airlines to fly domestic routes profitably, or risk a capacity shortfall limiting future growth.
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