In crisis, Air India wants it all: Let us live, let others die

With Air India caught in a financial tailspin, Civil Aviation Minister Praful Patel will meet Prime Minister Manmohan Singh to work out the contours of a long-term revival strategy including government financial support to overcome some of the current difficulties.

While discussions now move to a higher level after Patel's two-hour review meeting with officials today, the political leadership is stunned by the demands Air India has made of the government.

The airline has drawn up a bailout package of about Rs 15,000 crore — Rs 5,000 crore as equity infusion and the rest as soft loans. This, sources said, would be cut by at least half to a total package of about Rs 5,000-7000 crore — that too, if the PM is convinced.

Some other demands are even more difficult to meet.

At a meeting with the PM's Principal Secretary T K Nair and Cabinet Secretary K M Chandrasekhar, Air India demanded that sixth freedom rights to all foreign airlines be reviewed. This essentially allows foreign airlines to operate to multiple destinations within India. Already, the Civil Aviation Ministry is exercising greater caution with fresh requests, but sources said it would be impossible to simply abrogate rights settled through bilateral agreements with other countries.

The airline wants a freeze on capacities of foreign airlines so that Air India gets some breathing space. This would mean no further negotiations on air bilaterals to improve capacities and services by other carriers. It has also asked that private domestic carriers should be advised to give up their "surplus" route entitlements, particularly in revenue earning sectors like the Gulf so that Air India can gain.

It's learnt that these suggestions have not gone down well with the political leadership, as this approach tends to not only undermine other carriers, but actually works on the old assumption that air bilateral agreements must be suited to Air India rather than be based on passenger demand.

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