Air India blows up taxpayer rupees on PM's trips to America
The CAG auditor's report, tabled in parliament on Tuesday, said the airline indulged in 'wasteful expenditure' of over Rs 15 crore by hiring pricey foreign pilots and free-spending on American limos for the PM and his delegation.
New York: Problems at state-run Air India are rarely resolved easily, so don't expect it to ditch its proclivity for utter wastefulness any time soon. An investigation by the Comptroller and Auditor General (CAG) exposes outrageous waste of taxpayer rupees.
The auditor's report, tabled in parliament on Tuesday, said the airlines indulged in "wasteful expenditure" of over Rs 15 crore by keeping an unused warehouse in London's Heathrow Airport for nine years, hiring pricey foreign pilots and free-spending on American limos for the PM and his delegation.
As the national carrier, Air India naturally carries the Prime Minister in comfort wherever he needs to travel. Turns out, Air India also generously put limousines at the beck and call of the PM's delegation during trips to the US in 2009, 2010 and 2011. According to the auditor, Air India overpaid Rs 75.26 lakh to the US limo company by accepting "abnormally" high transportation rates.
CAG said that hourly rates paid by Air India were 2.5 times higher than those paid by the Indian embassy when it hired the same luxury cars. Air India tried to defend itself by telling the federal auditor that the limo service offered cheaper bulk rates to the embassy.
The auditors blew a hole in the argument saying that the embassy didn't get any special discounts but availed of a flat US market rate. This appears to be a case of the limo company robbing Air India blind; or airlines officials looking the other way because they were getting something out of it.
The auditor also pointed out that Air India hired foreign pilots that cost some Rs 3 lakh more compared to readily available Indian pilots.
"This indicated a general absence of concern for the financial health of the company which was reeling under severe cash crunch during this period," CAG said in its report.
The sad truth is that Air India, hit by a bloated cost structure, has not turned a net profit for six years, and relies on handouts from New Delhi to survive. Today the Maharaja looks distinctly shabby with an estimated loss of $1.45 billion in the 2011-12 fiscal year, according to the Centre for Asia Pacific Aviation. The long, drawn-out pilots' strike this year also cost almost $120 million.
Air India is in the midst of implementing a turnaround plan which is expected to focus on a hub-and-spoke route model, and it plans to cut costs by redeploying staff and unloading non-core real estate.
For starters, Air India should pay attention to CAG's report and surrender its rented cargo warehouse in Heathrow Airport. Air India took the space from the British Airport Authority (BAA) in 1968 on a long lease till 2019. To cut a long story short, Air India's cargo handler Menzies Aviation Limited stopped using the London warehouse nine years ago.
"Despite receiving an offer from BAA in 2003 for early termination of lease at a market value of 3.35 million pounds (Rs 26.23 crore), the Company (Air India) inexplicably preferred to hold the asset idle over the years," said CAG, in its report.
The government bailed out Air India with $5.8 billion in April, after a $3.5 billion debt restructuring last year. According to reports, the broke Maharaja is even thinking of selling its art collection. Perhaps, it should just preserve the art and stop wasting money.
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