Are foreign airlines responsible for Air India’s failure?

Though foreign airlines operating in India in the last couple of years observed an enormous growth, they severely affected the business of state-run Air India. Due to mounting losses of the national carrier, the cabinet secretariat decided to stop allowing rights to foreign airlines on profitable routes to and from India.

Last month, Air India asked for Rs.20,000 crore to recover from the worst financial losses in its history. The Civil Aviation Ministry did not agree with its proposal and decided to give Rs.3000 crore. The issue of financial subsidy to Air India provoked a serious discussion in the Loksabha. Many even questioned the credibility of Civil Aviation Minister Praful Patel.

In his defense, Praful Patel said that back in 2004, when the NDA government left office, foreign airlines operated 711 flights to and from India which rose up 1,315 flights every week till the summer of 2009. The number of passengers during these period rose from 14 million to 27 million. In his written statement, Mr. Patel also said that international airlines specify their routes, which are based on the traffic demand, from the very beginning in their contracts. Allowing foreign airlines on various routes also help the country’s economy by boosting tourism and creating jobs for people.

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The Economic Times