Sunday, September 30, 2012

Free market economy is injected with reform cromin again and again. But revival scenario does not satisfy corporate greed as yet.Corporate governance of India is all set to privatise AIR India.

Free market economy is injected with reform cromin again and again. But revival scenario does not satisfy corporate greed as yet.Corporate governance of India is all set to privatise AIR India.

Palash Biswas

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Free market economy is injected with reform cromin again and again. But revival scenario does not satisfy corporate greed as yet.Corporate governance of India is all set to privatise AIR India. Backed by robust economic growth, its huge geographical expanses and a population that tops well over a billion both at home and abroad, the sky should be the limit for India's civil aviation sector.This could not be further from reality, with many of the country's carriers buckling under the weight of excessive debt, high taxes and an indigenous population of whom less than one percent regularly use air travel.Aviation sector is opened for foreign capital only recently.Now the policy is also finalised. Only an executive order after cabinet green signal is waited.Meanwhile, overseas investors pumped in more than Rs 19,000 crore (USD 3.5 billion) in the Indian stock market in September, the highest monthly inflow in seven months, on account of bold economic reform initiatives taken by the government. Thus, FII investment in the country's equity market has reached Rs 82,331 crore (USD 15.85 billion) so far this year, and Rs 25,140 crore (USD 5 billion) in the debt market during the same period. Reserve Bank banks on consumer market to boost the economy as Reserve Bank Deputy Governor Anand Sinha said today,India can recover from global economic slowdown faster than China as the economy is driven by domestic consumption, but the country needs to "get its act together" for this to happen!Sinha is in Beijing to take part in the Regional Policy Forum on Financial Stability and Macro-prudential Supervision.

On the other hand,an uptrend in the stock market and various reform measures being undertaken by the government and regulator Sebi may help revive the initial public offering (IPO) segment in the coming months, experts believe.While the number of the companies having filed IPO papers with Sebi (Securities and Exchange Board of India) is not very high, a number of entities have already got the go-ahead from the market regulator but have been holding on their plans in the absence of conducive market conditions. In the quarter ending today, at least four companies, including Bharti Infratel, G B Tools and Forgings Ltd, Just Dial Ltd and V-Mart Ltd have filed their respective Draft Red Herring Prospectus (DRHP) to raise funds through IPOs.

For yet another stimulus,Parthasarathi Shome panel, looking into the taxation issues relating to GAAR (General Anti-Avoidance Rules), is likely to submit its final report to Finance Minister P Chidambaram on Monday.It would allow tax evation and enable partially deactivated black money cycle!

Builder mafia promoter raj has to be further strengthen asThe Finance Ministry is considering a proposal to relax funding norms for the realty sector so that good housing projects are not starved of funds.

"The Ministry is actively looking at options ... how to ramp up demand in the housing sector. We are studying all the possible impediments," an official source said.

"We are of the view that good project will be funded," the source said.

Banks are cautious in lending to the real estate developers because there is a huge mismatch in price and demand.

While dismissing general perception of holding on to inventories, real estate developers have been expressing concern that many projects are stalled due to lack of funds.

Loss-making national carrier Air India should be partly privatised as private investors will focus on maximising profit and in turn solve the carrier's operational issues, a study 'Competitive Framework of Civil Aviation Sector' of the Indian Institute of Corporate Affairs (IICA), commissioned by the Corporate Affairs Ministry has said.

"Bringing in private players and capital to operate India's national carrier will help address some of the airline's operational issues, while freeing government funds for other purposes".

"Partially privatising Air India would create incentives for the carrier to compete with other airlines, since Air India's private investors would seek to maximise return on their investment," said the Study Report

However, Civil Aviation Minister Ajit Singh recently ruled out any move to privatise Air India as government was pumping in Rs 30,000 for its restructuring.

Airlines flying to Indian airports could face an auction for peak-time landing slots in a shake-up of aviation policy under the government's economic reform drive.

Authorities are also in talks with suppliers to cut taxes on aircraft fuel, a move that would help local carriers which posted losses of $2.5 billion last year as they grappled with high airport charges and below-cost fares.

Debt-strapped Kingfisher Airlines, once India's No 2 airline, is operating only a quarter of its fleet while national carrier Air India is reliant on a $5.8 billion taxpayer bailout to stay in the air.

Air India, the nation's state-owned flag carrier was earlier this year granted a $5.8bn bailout from the government to shore up its leaky finances, not to mention having to contend with pilot strikes and a botched attempt to join Star Alliance.

Things are not much rosier at Kingfisher Airlines, which had the second largest market share in India until the financial crisis. In early 2012, the operator was forced to scrap all of its international routes as well as suffering the indignity of having 75 percent of its aircraft repossessed by creditors, while its debts estimated at $1.3bn led Kingfisher to be suspended from the International Air Travel Association.

Earlier this month, India announced major reforms designed to revive economic growth and avoid a ratings downgrade.

"The policies that are now in place were made several years back. Things have changed now. We need to adapt to the changing times," civil aviation minister Ajit Singh told reporters on Friday.

He gave few details but analysts pointed out that Indian airport charges are already very high, with New Delhi the world's costliest, according to the International Air Transport Association.

Singh also said he would "nudge" local carriers to operate more flights to smaller towns but did not elaborate.

Analysts said the current system of allocating landing and takeoff slots on an ad hoc basis has become a major headache with the increase in traffic in Asia's third-largest economy and the emergence of low-cost carriers.

The new developments come just weeks after India, which has an aviation market a fifth the size of China's despite comparable populations, relaxed rules to allow foreign airlines to own up to 49 per cent in Indian carriers.

Singh said Maharashtra, home to India's financial hub Mumbai, is willing to cut taxes on jet fuel.

Aviation fuel, which makes up about half the cost for an airline, is about 50-60 per cent costlier in India, mostly due to state taxes.

Singh also said ailing Kingfisher Airlines, owned by billionaire liquor baron Vijay Mallya, could lose its licence to fly if it fails to operate at least five aircraft.

Lenders to Kingfisher held inconclusive talks about the beleaguered carrier's turnaround plan on Thursday and will meet again next month, a source told Reuters.

Mallya told shareholders on Wednesday he was in talks with foreign carriers for investments, reiterating comments he has made over the past year without any concrete developments.

The very announcement of the government's decision to allow foreign airlines to invest in domestic carriers has sent the stocks of Kingfisher Airlines and SpiceJet soaring, the exception being Jet Airways that has seen its stocks decline.

The biggest gainer among the three listed Indian carriers is Kingfisher Airlines, whose stocks went up by 60.88 per cent from Rs 10.02 on September 13, to Rs 16.12 on September 28.

During the same period, the value of SpiceJet stocks rose by 12.25 per cent to Rs 37.10. Jet Airways' stock fell 4.35 per cent during the period and closed at Rs 345.55 on Friday.

The government's relaxation of the FDI policy in aviation is seen as a major boost for the aviation sector.

Kingfisher, SpiceJet and GoAir are likely to get foreign partners, which will help them financially and give access to the large network and operational efficiencies of the international carriers.

Jet Airways and IndiGo have not been in favour of the policy relaxation.

Analysts say that the rise in stock value has been largely fuelled by the government's announcement.

"Jet has lost its stock value in recent times, as it has not shown interest in getting a foreign partner whereas the other two airlines have shown interest in getting foreign partners. The stock values are up on sentiments, as the finances of the aviation companies are still strained," said Mahantesh Sabard, senior analyst at financial services firm Fortune Equity India.

Sabard further said that the operating cost during the second quarter of the current fiscal are higher and is likely to impact finances of the airlines.

IICA had nominated Nathan India as consultants to carry out an analysis on competition-related issues in the civil aviation sector.

The report pointed out that the Air Corporation Act 1953 provided a legislative framework within which the Government could provide funds for capital expenditures as well as potential bailout funds for the national carrier.

However, "this regulation gives Air India an unfair competitive advantage, by creating a framework through which it may apply for government financial assistance. The Act lacks competitive neutrality with regards to airlines in terms of access to government funds for capital expenditures and potential bailout," it said. The report further said the regulation which prescribes that operational plans submitted by the national carrier would be considered before allocation of traffic rights to other eligible applicants, was deterrent to competition in the market.

"This rule lacks competitive neutrality in assigning traffic rights. In order to increase its customer base, Air India will take the best available routes, thus maintaining an unfair competitive advantage over other eligible Indian international carriers," it said.

The report recommended that aviation regulator DGCA should consider abandoning preferential international route assignments to the national carrier, which would allow private carriers to compete with Air India.

Taking away Air India's right to priority route assignments, it said, would also help other Indian international carriers expand service to additional global destinations, leading to expansion in the range of choices for consumers.

A collective gasp of relief will have been let out then on 14 September, when India's government cleared a change in policy that would allow foreign airlines to purchase shareholdings of up to 49 percent in domestic carriers for the first time in fifteen years. The decision should clear the runway for overseas parties to provide a much-needed capital injection in the industry. Given the troubles the sector is facing, though, it begs the question: India's civil aviation industry may be up for sale, but who is buying?

Airlines in the Gulf, some of which are flush with government petrodollars and already serving a large Indian expat population, are interested, it would seem.

Neil Mills, CEO of low-cost airline SpiceJet told Arabian Business days before the foreign direct investment ruling went through that the Chennai-based carrier had held "preliminary discussions" with at least one carrier based in the Gulf.

"There have been preliminary discussions to check in principle whether there is interest on both sides and the confirmation there would be 'yes there is'," Mills said. He declined to disclose which airline or airlines he was referring to, although a senior industry source later told Arabian Business that Qatar Airways was one of them.

The negotiations, Mills explained, had largely been academic up to that point. "[Talks have] been on a preliminary basis, because they've quite rightly said 'what's the point in investing money in due diligence if the rule to enable [an investment] doesn't even exist'," he added.

Incredible India and key aviation partners are among over 100 international air transport organisations in Abu Dhabi this weekend, discussing the latest developments in the global aviation sector.

Spicejet, Indigo, Air India Express, Kingfisher, Jet Airways, the Airports Authority of India, Goa Airport, and Kolkatta International Airport are all in attendance, showcasing their latest products and developments at the 18th World Routes Development Forum.

Senior executives from these companies are rubbing shoulders with government ministers and aerospace leaders in an unparalleled environment which facilitates networking and learning this weekend.

Strengthened by the array of co-located activities taking place as part of the World Route Development Forum, the summit provides an exclusive arena which allows everyone to meet the people who are creating the future of air transport.

The future Indian aviation outlook certainly looks rosy for India.

According to Airbus' latest market forecast, Indian carriers will require 1,043 new aircraft valued at US$145 billion between now and 2030 to satisfy surging annual demand.

India's market for new aircraft makes it the world's fourth largest in both number of aircraft and value.

Indian annual passenger traffic growth rates of 7.2 per cent are well above the regional Asia Pacific average growth rate of 5.9 per cent and the world average 4.8 per cent.

Of the requirement for 1,020 new passenger aircraft, some 860 will be for growth and 160 to replace the eldest aircraft in the existing fleet of 327.

By 2030, this means that India's passenger fleet will more than triple to some 1,180 aircraft.

The new passenger aircraft include 646 single aisles like the A320 and A320neo Family, 308 twin aisles like the A350 XWB and A330, and 66 very large aircraft such as the A380.

Growing urbanisation and population concentrations combined with a growing middle class and dynamic economic growth are driving demand and this trend is expected to continue.

Despite near term challenges, the Indian economy is forecast to continue expanding, helping India's growth in domestic air travel to reach even higher growth rates of nearly ten per cent annually, making it one of the fastest growing aviation markets anywhere in the world.

"By 2030, India's economy is forecast to be the fourth largest in the world creating exceptional potential for growth in the aviation sector.

"Through our Indian industrial partnerships we are proud to boast that every A320 today is partly made in India," said Kiran Rao, president of Airbus India.

Among some of the latest news from India, Air India became the fifth airline in the world to take delivery of the Boeing Dreamliner 787.

"The 787 will allow Air India to open new routes in a dynamic marketplace and provide the best in-flight experience for our passengers," said Rohit Nandan, Air India chairman.

Air India follows in the footsteps of All Nippon Airways, Japan Airlines, LAN Airlines and Ethiopia Airlines.

This delivery is the first of 27 Dreamliners for Air India.

The airplane is equipped with 18 business class seats and 238 economy class seats.

The 787 has the range and capability to allow Air India to deploy the Dreamliner on many routes including the Middle East, Europe, Asia and Australia.

"We are pleased to celebrate another historic moment in our nearly seven-decade long relationship," said Dinesh Keskar, senior vice president of Asia Pacific and India Sales for Boeing Commercial Airplanes.

"I am sure Air India and their customers will be thrilled to experience the revolutionary features on the 787, an airplane that will be the key focus of the airline's turnaround plan."

This is the latest coup for the Indian Government Tourist Office, which was named World's Leading Tourist Board as well as being named World's Leading Destination by the World Travel Awards in 2011.

Drawing on the success already achieved by the destination and its projected growth, later this the World Travel Awards Grand Final will be staged in Delhi later this year, drawing the heads of the global travel and tourism industry.

Speaking to PTI, Reserve Bank Deputy Governor Anand Sinha also said "confidence issues like the general pessimism and not-so-good-feel factor also affected the economy".

"Both economies (India and China) are affected by the global economic slowdown. But India being a domestic consumption driven economy, could recover faster," he said.

"But for that we have to get our act together. Being dependent on domestic economy, we would be less affected by export sector performance. So, that could be our strength. But we have to get our act together and whatever weaknesses we have to get around them," he said responding to a question.

When asked what should be done by India to arrest the slide in growth, he said, "We have to get hold of inflation. If we get hold of it, growth will have better prospect. Once growth takes off things would be better. Retail inflation in India is in double digits at 10.03 per cent. RBI had been repeatedly saying that focus of its monetary policy is on controlling inflation.

"We must realise that even if we put our domestic situation on sound footing, what happens in the rest of the world, we cannot be totally immune to that. So you will not have the same growth rate as we would have had if the world economy is in good shape."

Sinha also said "not so good feel factor", besides the global economic slowdown, for the current domestic situation.

"One reason is global economic slowdown. That has affected us is the trade channel. We are not export dependent but exports suffered due to global economic crisis. Apart from trade issues, confidence issues like the general pessimism and not so good feel factor also affected the economy," he said, adding that sentiments are very important when it comes to taking business decision.

Sinha also spoke about the negative influence of financial markets on India.

"We are globalised to some extent. There also we are affected. It affects the equity markets and foreign exchange rate," he said.

However, according to Sinha, the essential problem in India is inflation.

"We are a supply constrained economy. Because of that inflation has risen, essentially the food inflation. That is a supply side issue," he said.

The other factor was that India has been affected by loose monitory policy being followed by various countries to tide over the crisis which in turn led to increase in commodity prices, he said.

Also rising oil prices affected the economy. India is heavily dependent on oil which also adds to inflation, he said adding that the prices keep going and up down.

"As a result we have to tighten interest rates," he said.

On growth rates he said, "I would only say the growth has to go upwards. How much we can go I cannot say. All policies have been geared to go up," he said.

India registered 5.5 per cent economic growth rate in April-June period this financial year-- the worst first quarter performance in a decade. The expansion was mainly pulled down by poor show by the manufacturing sector.

About RBI cutting down the interest rates he said, "RBI is mindful of inflation growth in excess. At the same time RBI first task is to keep inflation down. What will happen in the next few weeks is not possible for me to say. Intense review is carried before any decision is taken so I won't be able to tell you".

RBI's half yearly monetary policy review is expected on October 30.

On the success of FDI in retail he said, it all depends on how much India gets in the end.

"On the positive side it improved sentiment as was shown in the market. Rupee has rebounded to a considerable extent. There is certainly promise," he said.

At the conference on Mitigating Procyclicality in Banking and Bank Regulation, Sinha also spoke of how Indian banks managed to tide over the 2008 economic crisis by following policy of Capital Adequacy Ratio in certain sectors, which came in handy during the crunch time.

He said there is also general discussion about the new international banking regulations being contemplated to ward off future crisis.

"There are apprehensions in India an all the countries, when the capital requirement becomes much higher what happens to growth."

In September, Foreign Institutional Investors (FIIs) were gross buyers of shares worth Rs 66,752 crore, while they sold equities amounting to Rs 47,491 crore translating into a net inflow of Rs 19,261 crore (USD 3.56 billion), according to the data available with the market regulator Sebi.

This was the highest net investment by FIIs in stocks since February, when they had infused Rs 25,212 crore. Besides, FIIs had infused Rs 10,804 crore in August and Rs 10,273 crore in July.

Market experts said the month of September has seen extraordinary amount of FII flows on several tough economic decisions including opening up FDI in retail and aviation sectors, capping up of cooking gas subsidy and hike diesel prices, taken by the government.

"FII inflows was driven by policy reforms announced by the government and I think they will continue to invest in the domestic equity market in next six to eight months as well on further reforms in sectors like insurance and pharma," Wellindia Vice President Research Vivek Negi said.

Another market analyst, Destimoney Securities MD and CEO Sudip Bandhopadhyay said,"The overall sentiment with regards to growth has enhanced the FII flows. Besides, foreign investors have also got support from easing of monetary policy by the US Federal Reserve."

Apart from equity, FIIs also invested Rs 622 crore in the debt market in the current month.

The strong FII inflows have pushed the BSE's benchmark Sensex by 1,382 points or eight per cent to settle at 18,762.74 points on Friday.
As on September 28, the number of registered FIIs in the country stood at 1,753 and total number of sub-accounts were 6,325 during the same period.

Market analysts expect the trend to pick up in the coming weeks, as the government and Sebi have expressed their intention to revive equity culture in the country and help channelise the household income into stocks, mutual funds and insurance sectors, rather than in idle assets like gold.

A revival in the secondary market trends will also help the firms shift their focus to IPOs for their fund-raising plans. Most of the companies plan to utilise their proposed

IPO proceeds for capacity expansion as well as working capital requirements.

"The current market conditions has turned favourable for companies planning to come out with their IPOs mainly on account of various initiatives taken by the government," Sudip Bandhopadhyay MD and CEO at Destimoney Securities said.

"Besides, festive season is also approaching so I expect many companies that withdrew their IPO and companies that have not hit the capital market despite getting Sebi's approval on subdued market conditions would definitely plan to go ahead with their public issues," he said.

In the last three months, broader market Sensex gained over 1,300 points or more than seven per cent as Foreign Institutional Investors (FIIs) invested a hefty sum of a

little over Rs 40,000 crore on the back of a slew of reforms initiated by the government.

According to market analysts, several tough economic decisions, including to open up FDI in retail and aviation sectors, capping up of cooking gas subsidy and hike diesel prices, taken by the government recently have boosted the secondary market, which would eventually help companies to launch their IPOs.

"Any company which was planning for the IPO in the last two-three years can hit the market as it is any excellent time for the IPO," Wellindia President (Research) Vivek Negi said.

He further said that the success of any IPO depends on the sound fundamentals and pricing issue.

Sebi has already floated a discussion paper on 'mandatory safety net mechanism' in IPOs, a move that would help in fair-pricing of the public offers and would provide capital guarantee on a certain portion of investments.

Besides, the regulator has also announced various other IPO market reforms, steps for enhanced distribution network, incentives for brokers, bidding through electronic IPO

platforms and allotment of a minimum lot of shares.

These steps are likely to help in creating a greater appetite for IPOs in the near future, provided the market conditions remain conducive and there are no adverse global

developments that might affect the domestic investor sentiments.

Earlier this month, Bharti Infratel, tower unit of telecom giant Bharti Airtel, had filed papers for an IPO with Sebi and is expected to raise up to USD 1 billion (about Rs 5,500 crore).

Rashtriya Ispat Nigam Ltd (RINL), which had deferred its IPO plans twice since the filing of the draft documents in May due to volatile market conditions, is most likely to hit the capital market in the middle of the next month.

The RINL's IPO, which would mark the kick-off the government's disinvestment process for the current fiscal. The government is targeting to raise Rs 30,000 crore through share sale plan during the period.

Besides RINL, four other firms -- Goodwill Hospital and Research Centre, Fast Train Cargo, Ace Tours Worldwide and C Mahendra Infojewels -- had filed their respective IPO documents during April-May period with the Sebi, but none of them hit the capital on lacklustre market conditions.

Besides, two companies packaging materials maker Plastene India and auto parts manufacturer Samvardhana Motherson Finance - shelved their IPO plans in May citing poor response from investors amid weak broader market.

Goodwill Hospital had also pulled out its IPO in January, but once again filed draft papers in May to mop up Rs 98 crore through share sale. The IPO was shelved after the issue failed to get subscription of even one per cent of its shares on sale. It was the first company to withdraw its IPO in 2012.

In addition, around 20 companies including Reid & Taylor, Micromax Informatics, Embassy Property, Joyalukkas and Tata Autocomp System had called off their IPO plans totalling nearly Rs 9,000 crore in this year, according to SMC Global Securities Strategist & Head of Research Jagannadham Thunuguntla.

Air India

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Not to be confused with Air India Express.

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Air India

IATA AI	ICAO AIC	Callsign AIRINDIA

Founded

July 1932 (as Tata Airlines)

Commenced operations

October 15, 1932 (79 years ago)
Founder
Rohit Nandan, CMD

Hubs

Chhatrapati Shivaji International Airport (Mumbai)
Indira Gandhi International Airport (Delhi)

Secondary hubs

Focus cities

Bengaluru International Airport (Bangalore)
Cochin International Airport (Kochi)
Calicut International Airport (Kozhikode)
Rajiv Gandhi International Airport (Hyderabad)
Sardar Vallabhbhai Patel International Airport (Ahmedabad)
Dubai International Airport
Hong Kong International Airport

Frequent-flyer program

Flying Returns

Airport lounge

Maharaja Lounge

Subsidiaries

Fleet size

123 (+29 orders)

Destinations

55 (excl. subsidiaries)

Company slogan

Your Palace in the Sky

Parent company

Air India Limited

Headquarters

Air India Building,
Nariman Point, Mumbai, Maharashtra, India

Website

http://airindia.in

Air India is the flag carrier airline of India. It is part of the government of India owned Air India Limited (AIL). The airline operates a fleet of Airbus and Boeing aircraft serving Asia, Europe and North America. Its corporate office is located at the Air India Building at Nariman Point in South Mumbai. Air India has two major domestic hubs at Indira Gandhi International Airport and Chhatrapati Shivaji International Airport. An international hub at Dubai International Airport is currently being planned.^[1]

Air India has the fourth largest share in India's domestic air travel market, behind Jet Airways, IndiGo and SpiceJet, as of May 2012.^[2] Following its merger with Indian Airlines, Air India has faced multiple problems, including escalating financial losses,^[3] discontent amongst employees, and poor customer service.^[4] Between September 2007 and May 2011, Air India's domestic market share declined from 19.2% to 14%, primarily due to stiff competition from private Indian carriers.^[5]^[6] In August 2011, Air India's invitation to join Star Alliance was suspended due to its failure to meet the minimum standards for the membership.^[7] In October 2011, talks between the airline and Star Alliance have resumed.^[8] In April 2012, the Indian government granted another bailout package to Air India, including Rs300 billion ($5.8 billion) of subsidies.^[9]

History

Tata Air Services

1940s-2007 Air India logo

Air India International Lockheed Constellation Bengal Princess at London Airport in 1953

Air India Boeing 707-320B in 1976

Boeing 747-200B at Montréal-Mirabel International Airport in 1983

The Maharaja is Air India's official Mascot

Early years

Tata Sons, a division of Tata Sons Ltd. (now Tata Group) was founded by J. R. D. Tata in 1932. ^[10]^[11]

The aviator Nevill Vintcent had an idea to run mail flights from Bombay and Colombo that connected with the Imperial Airways flights from the United Kingdom. He found a supporter for his plans from J. R. D. Tata of the Tata Iron and Steel Company. After three years of negotiations Vintcent and Tata won a contract to carry the mail in April 1932 and in July 1932 the Aviation Department of Tata Sons was formed. On 15 October 1932, J.R.D. Tata flew a single-engined De Havilland Puss Moth carrying air mail (postal mail of Imperial Airways) from Karachi's Drigh Road Aerodrome to Bombay's Juhu Airstrip via Ahmedabad. The aircraft continued to Madras via Bellary piloted by Vintcent.^[12]

Tata Airlines initially consisted of one Puss Moth aircraft, one Leopard Moth, one palm-thatched shed, one whole time pilot assisted by Tata and Vintcent, one part-time engineer and two apprentice-mechPran Nath Seth, Pran Nath Seth, Sushma Seth Bhat (2005). An introduction to travel and tourism. Sterling Publishers Pvt. Ltd. Retrieved 20 January 2011. Page 112</ref>^[13]

Initial service included weekly airmail service with a Puss Moth aircraft between Karachi and Madras via Ahmedabad and Bombay, covering over 1,300 miles. In its very first year of operation, Tata Airlines flew 160,000 miles, carrying 155 passengers and 10.71 ton of mail.^[14] In the next few years, Tata Airlines continued to rely for its revenue on the mail contract with the Government of Indi for carriage of surcharged mail, including a considerable quantity of overseas mail brought to Karachi by Imperial Airways. The same year, Tata Airlines launched its longest domestic flight - Bombay to Trivandrum with a six-seater Miles Merlin.^[15]

In 1938 it was re-christened as Tata Air Services and later same year was renamed as Tata Airlines. By this time Delhi and Colombo were also serviced.^[12]

Post-war expansion

Following the end of World War II, regular commercial service was restored in India and Tata Airlines became a public limited company on 29 July 1946 under the name Air India. In 1948, after the independence of India, 49% of the airline was acquired by the Government of India, with an option to purchase an additional 2%. In return, the airline was granted status to operate international services from India as the designated flag carrier under the name Air India International. On 8 June 1948, a Lockheed Constellation L-749A named Malabar Princess (registered VT-CQP) took off from Bombay bound for London Heathrow via Cairo and Geneva. This marked the airline's first long-haul international flight, soon followed by service in 1950 to Nairobi via Aden.

On 25 August 1953, the Government of India exercised its option to purchase a majority stake in the carrier and Air India International Limited was born as one of the fruits of the Air Corporations Act that nationalised the air transportation industry. At the same time all domestic services were transferred to Indian Airlines (now renamed as Indian). In 1954, the airline took delivery of its first L-1049 Super Constellations and inaugurated services to Bangkok, Hong Kong, Tokyo and Singapore.

The jet age

Air India International entered the jet age in 1960 when its first Boeing 707-420, named Gauri Shankar (registered VT-DJJ), was delivered. Jet services to New York City via London were inaugurated that same year on 14 May 1960. On 8 June 1962, the airline's name was officially truncated to Air India. On 11 June 1962, Air India became the world's first all-jet airline.

In 1971, the airline took delivery of its first Boeing 747-200B named Emperor Ashoka (registered VT-EBD). This coincided with the introduction of the 'Palace In The Sky' livery and branding. A feature of this livery is the paintwork around each aircraft window, in the cusped arch style of windows in Indian palaces. In 1986 Air India took delivery of the Airbus A310-300; the airline is the largest operator of this type in passenger service. In 1988, Air India took delivery of two Boeing 747-300Ms in mixed passenger-cargo configuration.

Early 1990s

In 1993, Air India took delivery of the flagship of its fleet when the first Boeing 747-400 named Konark (registered VT-ESM) made history by operating the first non-stop flight between New York City and Delhi. In 1994 the airline was registered as Air India Ltd. In 1996, the airline inaugurated service to its second US gateway at O'Hare International Airport in Chicago. In 1999, the airline opened its dedicated Terminal 2-C at the renamed Chhatrapati Shivaji International Airport in Mumbai.

2000 – present

In 2000, Air India introduced services to Shanghai and to its third US gateway at Newark Liberty International Airport in Newark. In May 2004, Air India launched a wholly owned low cost airline called Air-India Express. Air India Express connecting cities in India with the Middle East, Southeast Asia and the Subcontinent. In 2004 Air India launched flights to its fourth US gateway at Los Angeles International Airport in Los Angeles (which has since been terminated) and expanded its international routes to include flights from Ahmedabad, Amritsar, Bangalore and Hyderabad.

On 1 December 2009, Air India introduced services to its fifth US gateway at Washington Dulles International Airport in Washington, D.C., accessed via a stopover at JFK Airport in New York City. This service has been terminated.

Re-privatisation plans

In 2001, the Government of India put forward plans on privatizing Air India.^[16] One of the bids was by a consortium of Tata Group-Singapore Airlines. However the re-privatisation plans were shelved after Singapore Airlines pulled out and the global economy slumped.^[17]

Merger with Indian Airlines

In 2007, the Government of India announced that Air India would be merged with Indian Airlines. As part of the merger process, a new company called the National Aviation Company of India Limited (NACIL) was established, into which both Air India (along with Air India Express) and Indian Airlines (along with Alliance Air) will be merged.

On 27 February 2011, Air India and Indian Airlines merged along with their subsidiaries to form Air India Limited.

Financial crisis

Around 2006-2007, the airlines began showing signs of financial distress. The combined losses for Air India and Indian Airlines in 2006-07 were 770 crores ( 7.7 billion). After the merger of the airlines, this went up to 7,200 crores ( 72 billion) by March 2009.^[18] This was followed by restructuring plans which are still in progress.^[19] In July 2009, SBI Capital Markets was appointed to prepare a road map for the recovery of the airline.^[20] The carrier sold three Airbus A300 and one Boeing 747-300M in March 2009 for $18.75 million to survive the financial crunch.^[21]

As of March 2011, Air India has accumulated a debt of Rs. 42,570 crore (approximately $10 billion) and an operating loss of Rs. 22,000 crore, and is seeking Rs. 42,920 crore from the government.^[22] For the past three months (June, July, August 2011), the carrier has been missing salary payments and interest payments and Moody's Investor Service has warned that missing payments by Air India to creditors, such as the State Bank of India, will negatively affect the credit ratings of those banks.^[22]^[23] A report by the Comptroller and Auditor General (CAG) blamed the decision to buy 111 new planes as one of the major causes of the debt troubles in Air India; in addition it blamed on the ill timed merger with Indian Airlines as well,.^[24]^[25]

Due to high fuel and loan costs, Indian government has already pumped 32 billion rupees into Air India since April 2009 and in March 2012 government bailed out Air India Ltd. with a 67.5 billion ruppes ($1.4 billion) which the amount almost double of the federal government has spent on new hospitals over the past three years.^[26] Air India's corporate headquarters is located at the Air India Building at Nariman Point in South Mumbai. The airline moved there in 1970. The Air India Building also serves as a regional office for Indian. As of 8 May 2012 the carrier invited offers from banks to raise up $ 800 million via external commercial borrowing and bridge financing. This was stated in the documents put up on the carrier's website.^[27]

Delhi Hub

On 1 March 2009, Air India had made Frankfurt Airport at Frankfurt am Main as its international hub for onward connections to United States from India; however, the airline shut down the Frankfurt hub on 30 October 2010. However on 14 July 2010, Air India chief, Arvind Jadhav announced their intention to make the new terminal 3 at Delhi's Indira Gandhi International Airport the hub for international and domestic operations with the plans of starting new direct flights to Chicago and Toronto and also taking almost all international long haul flights away from its former Primary hub at Mumbai's Chhatrapati Shivaji International Airport due to lack of space.^[28] This would also provide greater convenience for transit passengers who before had to transfer between the international and domestic terminals which were located on completely different sides of the airport. They will now be able to catch their connecting flights within the same terminal.

Return to profitability plans

The new Chairman and Managing director wants to change the order of some of the 111 planes ordered in 2006 to get narrow-body aircraft instead of the wide-body aircraft.^[29] On May 4, 2012, the airline was fined $80,000 by the U.S Transportation Department for failing to post customer service and tarmac delay contingency plans on its website and adequately inform passengers about its optional fees.^[30] On May 8, 2012 about 100 pilots went on medical leave as a mark of protest while their talks with the management were still on.^[31] Later, the same day it sacked ten agitating pilots and de-recognized their union after 160 pilots failed to join duty by the given deadline.^[32] On the 15th of May, the Union Civil Aviation Minister Ajit Singh stated that the Government was giving Air India one last chance and that it must perform in order to qualify for a bailout.^[33] On May 26, 2012 Aviation minister Ajit Singh announced that he would go ahead and hire new pilots if the strike did not end soon. While, AI management gave an assurance to Delhi High Court that it would look into the hardships of the pilots sympathetically,the striking pilots have decided to end the 58 day old strike immediately.^[34]^[35] Due to pilots' strike Air India suffered a loss of 500 crore (US$94.5 million) in 45 days.^[36] Eventually, following the intervention of the Delhi High Court, the pilots called off their 58 day strike on 4 July 2012.^[37]

Criticism and controversy

State ownership

Air India today still remains as a state-owned company through Air India Limited. However, government ownership of the airline has subsequently led to multiple problems, such as enormous market share losses, declining profits, and escalating labor disputes. Historically, there have been numerous attempts to privatise Air India in hopes of a better future, but government interference has since prevented this goal from being achieved. Furthermore, it is also believed that mismanagement and corruption have impacted Air India's financial performance.^[38]

Customer service

A major complaint about Air India was its negative overall brand image and reputation for poor customer service, and reviews about rude staff.

Star Alliance

In December 2007, Star Alliance invited Air India in an effort to expand its presence in the Indian subcontinent. However, issues with technology and software upgrades and the aftermath of its merger with Indian Airlines have delayed its entry into the alliance for roughly three and a half years. When the final deadline for joining came in July 2011, Air India's application was suspended, and was told it failed to meet the minimum criteria to join. In response, many of Air India's officials complained to Star Alliance about the suspension of its application, claiming that they already met all of the requirements.^[39] But in October of that same year, talks between Air India and Star Alliance have resumed.

Corporate affairs and identity

the Air India Building, Nariman Point, Mumbai

Organization

Subsidiaries

Air India Cargo

Air India Cargo Airbus A310-300F.

Main article: Air India Cargo

In 1954, Air India Cargo started its freighter operations with a Douglas DC-3 Dakota aircraft, giving Air India the distinction of being the first Asian airline to operate freighters. The airline operates cargo flights to many destinations. The airline also has ground truck-transportation arrangements on select destinations.

A member of IATA, Air India carries all types of cargo including dangerous goods (hazardous materials) and live animals, provided such shipments are tendered according to IATA Dangerous Goods Regulations and IATA Live Animals Regulations.

At the warehouse in Mumbai, Air India has developed a system of inventory management for cargo handling of import/export functions. This takes care of the entire management of cargo, supports Electronic Data Interface (EDI) messages with Indian Customs and replaces to a great extent existing paper correspondence between Customs, Airlines, and the custodians. This also replaces manual handling and binning of cargo at the warehouse in Mumbai by Air India.

Air India Express

Main article: Air India Express

Air India Express is the airline's low-cost subsidiary which was established in 2005 during the aviation boom in India. It operates scheduled passenger services primarily to the Persian Gulf and South East Asia. Air India Express is currently the only airline in Air India Limited which posts profits. It operates a fleet of Next Generation Boeing 737-800 aircraft.Cochin International Airport is the main hub of the airline from which it has connections to almost all the Gulf countries.

Air India Regional

Main article: Air India Regional

Air India Regional (formerly known as Alliance Air) serves mainly on regional routes. Its main hub is Delhi's Indira Gandhi International Airport.

Livery

Airbus A321 VT-PPW at Mumbai Airport

The present Air India Livery on the Boeing 777-300ER

Air India One, Official plane carrying Prime Minister and President of India

1970–2007 livery

Air India's livery was mostly painted in red and white colours. The bottoms of the aircraft remain metal and unpainted but the upper portion is given a white background along with the airline's name written in red. The name is in Hindi on one side and in English on the other. The painted on red palace style carvings on the outside of the windows refer to their slogan "your palace in the sky" which is written on the back of the aircraft. Near the noses of Air India aircraft, the air plane is given a name. Most planes are named after powerful Indian kings or landmarks. Finally, the tail is mostly red with again, the carrier's name written in Hindi on one side and English on the other.

In 1989, to supplement its "Flying Palace" livery, Air India introduced a new livery that was mostly white with a golden spinning wheel (as seen on the flag of India) on a red tail. Only applied to around a half of Air India's fleet, the new livery did not succeed, as the Indian flying public complained about the phasing out of the classic colours. The livery was dropped after two years and the old scheme was returned.

Pre-merger livery

On 15 May 2007, Air India refreshed its livery, making the Rajasthani arches along the windows slightly smaller, extending a stylised cheatline from the vertical tail of the aircraft to the nose, and painting a small portion of the underbelly red. Additionally, engine nacelles are now deep red, and a gold-coloured version of the airline's stylized Konark trademark now adorns both the vertical tail and engine nacelles.

Post-merger livery

On 22 May 2007, Air India and Indian unveiled their new livery. The logo of the new airline is a Flying Swan with the Konark Chakra placed inside it. The Flying Swan has been morphed from Air India's characteristic logo, 'The Centaur' whereas the 'Konark Chakra' is reminiscent of Indian's logo.

The new logo features prominently on the tail of the aircraft. Individually the Konark Chakra also features on all the engines of the aircraft. The choice of colours namely red for "Flying Swan" and orange for "Konark Chakra" are meant to signify vigour and advancement. Further the colours also have a strong association with two carriers thereby retaining the earlier imagery of traditional hospitality and service.

While the aircraft is ivory in colour, the base retains the red streak of Air India. Running parallel to each other is the Orange and Red speed lines from front door to the rear door, subtly signifying the individual identities merged into one. The brand name 'Air India' runs across the tail of the aircraft in hindi.

Destinations

Main article: Air India destinations

Air India serves 49 domestic destinations and 26 international destinations in 19 countries across Asia, Europe and North America.

Short-haul routes

Air India's short-haul routes mainly include domestic cities and cities in South East Asia and South West Asia. For short-haul routes Airbus A320 family are used.

Long-haul routes

The airline has long-haul destinations in East Asia, Europe and North America which are served using Boeing 777-200LR and -300ER aircraft.

Codeshare agreements

Air India has codesharing agreements with the following airlines at August 2011:^[41]^[42]^[43]

South African Airways^^
SriLankan Airlines (Future Oneworld member)
Swiss International Airlines^^
Turkish Airlines^^

^{* SkyTeam member
^^ Star Alliance members}

Fleet

Main article: Air India fleet

Fleet info

The Boeing customer code for Air India is 37, meaning a model name of, for example, a 747-437 (an Air India 747-400). As of May 2010, the average age of the Air India fleet is 9.5 years.

New aircraft orders

On 11 January 2006, Air India announced an order for 68 jets - 8 Boeing 777-200LR Worldliners, 15 Boeing 777-300ER,18 Boeing 737-800 and 27 Boeing 787-8 Dreamliners.But Air India has cancelled the order for 3 Boeing 777-300ER bringing the total order down to 20.
The airline received its first Boeing 777-200LR aircraft on 26 July 2007 and Boeing 777-300ER on 10 October 2007.
Air India received its first Boeing 787 dreamliner aircraft on 6 September 2012^[44] and it will officially enter service on 19 September 2012.^[45] All remaining aircraft are expected to be delivered by 2016.^[46]

Boeing 787 Dreamliner successfully completes its first test flight.^[47] The first of the 27 Boeing 787 Dreamliners ordered is ready and waiting for more than a month and a half at Boeing's Everett factory in Seattle, as of June 2012. The aircraft delivery though already three years behind schedule has been put off at the last minute due to a dispute over settlement of compensation amount for this delay with the Boeing.^[48] The compensation amount is to be approved by the Cabinet Committee on Economic Affairs. The committee is without its head since resignation of Pranab Mukherjee.^[49]

Services

Frequent flyer programme

Flying Returns is Air India's frequent flyer programme. The programme is also shared by all other Air India Limited carriers.

Premium lounges

Business Class seats on board the Boeing 777-300ER

The Maharaja Lounge (English: "Emperor's Lounge") is offered to First and Business class passengers. Air India shares lounges with other international airlines at international airports that do not have a Maharaja Lounge available.^[50] There are six ^[51] Maharaja Lounges, one at each of the six major destinations of Air India:

International

Air India's Maharaja Lounge at New York City's John F. Kennedy International Airport

London Heathrow Airport
John F. Kennedy International Airport (New York)

India

Bengaluru International Airport (Bangalore)
Chhatrapati Shivaji International Airport (Mumbai)
Indira Gandhi International Airport (Delhi)
Rajiv Gandhi International Airport (Hyderabad)

In-flight entertainment

Air India's Boeing 777-200LR/-300ER as well as some refurbished Boeing 747-400 aircraft use the Thales TopSeries IFE systems^[52] for on board in-flight entertainment. Airbus A310s do not have personal LCD screens. Airbus A330s have widescreen displays in Business and Economy classes but no personal IFEs.

Awards and recognitions

Preferred International Airline award for travel and hospitality from Awaz Consumer Awards 2006 ^[53]
Best International West Bound Airline out of India for three successive years by Galileo Express TravelWorld Award
Best Corporate Social Responsibility Initiative. by Galileo Express TravelWorld Award ^[54]
Best Short-Haul International Airline by Galileo Express TravelWorld Award 2008^[54]
The Mercury Award for the years 1994 and 2003, from the International Flight Catering Association, for finest in-flight catering services.
Amity Corporate Excellence Award instituted by the Amity International Business School, Noida, Uttar Pradesh to honour Corporates with distinct vision, innovation, competitiveness and sustenance.^[54]
Reader's Digest Trusted Brand Award^[54]
Dun and Bradstreet Award(D&B)- first in terms of revenue out of the top airline companies out of India^[54]
Best South Asian Airline award by readers of TTG Asia, TTG China, TTG Mice and TTG-BT Mice China, all renowned Mice and business travel publications.^[54]
Cargo Airline of the Year at the 26th Cargo Airline of the Year Awards^[55]
The airline entered the Guinness Book of World Records for the most people evacuated by a civil airliner. Over 111,000 people were evacuated from Amman to Mumbai – a distance of 4,117 km, by operating 488 flights in association with Indian, from 13 August to 11 October 1990 – lasting 59 days. The operation was carried out during Persian Gulf War in 1990 to evacuate Indian expatriates from Kuwait and Iraq.^[56]
The Montreal Protocol Public Awareness Award was awarded to Air India by the United Nations for environmental protection, especially in the ozone layer.^[57]
World's first all-jet airline- June 1962
World's largest operator of Airbus A310-300
Air India's security department became the first aviation security organisation in the world to acquire ISO 9002 certification (31 January 2001).
Air India's Department of Engineering has obtained the ISO 9002 for its Engineering facilities for meeting international standards.
Fifth airline in the world to receive the Boeing 787

Accidents and incidents

Ten Air India flights have fatally crashed, including those due to terrorist attacks. Air India has a record of 6.82 fatal events per million flights.^[58]

1950s

On 3 November 1950 Air India Flight 245 Malabar Princess a Lockheed L-749 Constellation (registered VT-CQP) carrying 48 people (40 passengers and 8 crew), flying on the Bombay-Cairo-Geneva-London route, crashed on Mont Blanc, France, killing all on board.^[59]^[60]
On 11 April 1955 Kashmir Princess a Lockheed L-749A Constellation registered (VT-DEP) carrying 19 people (11 passengers and 8 crew) was bombed in midair, killing 16 of the 19 on board.^[61]
On 19 July 1959 Rani of Aera a Lockheed L-1049G Super Constellation (registered VT-DIN) carrying 46 people (39 passengers and 7 crew) approached Santacruz Airport in conditions of poor visibility due to rain. The captain was using an altimeter with the barometric pressure set at 29.92". An overshoot was delayed and the aircraft crashed and suffered damage beyond repair. There were no fatalities.

The Air India Memorial in Toronto, Canada dedicated to the victims of Air India Flight 182

1960s

On 24 January 1966 Air India Flight 101 Kanchenjunga a Boeing 707-420 (registered VT-DMN) carrying 117 people (106 passengers and 11 crew) crashed on Mont Blanc, France, on the border between France and Italy, killing all on board. Among the dead was the noted Indian scientist, Homi J. Bhabha.

1970s

On 1 January 1978 Air India Flight 855 Emperor Ashoka a Boeing 747-237B (registered VT-EBD) crashed into the Arabian Sea after takeoff from Sahar International Airport (now Chhatrapati Shivaji International Airport) in Mumbai, killing all on board (213 persons; 190 passengers, 23 crew).

1980s

On 21 June 1982 Air India Flight 403 Gouri Shankar a Boeing 707-420 (registered VT-DJJ) carrying 99 passengers and 12 crew from Kuala Lumpur International Airport via Madras (now Chennai) crashed at Sahar International Airport after a heavy landing during a rainstorm. The fuselage exploded after starting a late go-around. Two crew members and 15 passengers were killed.^[62]^[63]
On 23 June 1985 Air India Flight 182 Emperor Kanishka a Boeing 747-237B (registered VT-EFO) was blown up in mid-air, mid-flight by a suitcase-bomb planted by Babbar Khalsa Terrorists allegedly as revenge for the Indian Government's operation on the Golden Temple on June 1984. The flight was on the first leg on its Montreal-London-Delhi-Bombay flight when it exploded off the coast of Cork, Ireland. The plane crashed into the Atlantic Ocean. All 307 passengers and 22 crew on board died.^[64] After this incident Air India suspended all services to Montreal.

1990s

On 7 May 1990 Air India Flight 132 Emperor Vikramaditya a Boeing 747-237B (registered VT-EBO) flying on the London-Delhi-Bombay route and carrying 215 people (195 passengers and 20 crew) touched down at Delhi's Indira Gandhi International Airport after a flight from London's Heathrow Airport. On application of reverse thrust, a failure of the no. 1 engine pylon to wing attachment caused this engine to tilt nose down. Hot exhaustion gases caused a fire on the left wing. There were no fatalities but the aircraft was damaged beyond repair and written off.^[65]