This was a good week for airlines in India — both state-owned Air India as well as private carriers, which pay the highest amounts in the world to buy aviation turbine fuel (ATF). A Group of Ministers on Tuesday took two key decisions (subject to the Cabinet’s final approval) — one to help Air India restructure crippling debts to banks totalling Rs 18,000 crores; the other allowing private airlines to import ATF directly. Air India, which is living a hand-to-mouth existence, might get a breather for at least two years, but all this does it to solve some immediate problems. Unless corrective action is taken to correct major distortions in financial, administrative and HR decisions taken by the earlier management, it is possible that thousands of crores in public money might just go down the drain. An airline simply can’t be run by an IAS officer, no matter how brilliant; fast decision-making on commercial issues is vital in this viciously competitive sector. The national carrier also badly needs a strong board to protect it from politicians and its own management, who are both prone to consider it their private property.
Allowing airlines to import ATF directly looks good on paper, but the logistics are mind-boggling. Even oil giant Reliance can’t help as there are dozens of airports that airlines fly to: where is the infrastructure to carry and store ATF everywhere? But this could be a good shock treatment for the states which are squeezing the airlines with usurious sales taxes.