Estimates of losses incurred by Air India present a shocking commentary on the financial management of the company and the gross mismanagement of the taxpayer’s money.

Once upon a time the pride of the nation, Air India seems to have now become a white elephant and a serious liability for the government. In fact, it is engaged in a desperate struggle for survival. Quite like the other airlines in India that are at their wits’ end trying to deploy ingenious methods to cope with the rather unprecedented rise in oil prices, Air India has also been somewhat traumatised by this disconcerting trend rendered more alarming by the noticeable drop in passenger traffic in the first quarter of this year. Given the grim prognostication about the levels international price of oil may reach, there is no basis at this point in time to harbour optimism that the worst is over. Oil prices have rarely come down in the past, at least not significantly.

Viewed from a broader perspective, Air India’s plight is in tune with the pathetic state of the global airline industry that is expected to register a loss of $6.1 billion (Rs 25,000 crore) in 2008-09. This figure acquires significance as the industry had reported a profit of $5.6 billion (Rs 23,000 crore) during the previous financial year. However, a more minute scrutiny of the finances of the airline reveals the distressing situation the national airline is in.

The officially estimated figure for Air India’s cumulative losses at the end of the financial year 2007-08 stood at Rs 2,144 crore. This has been estimated to have risen to Rs 2,300 crore by the end of the first quarter of the new financial year. On the contrary, one report in the media talks of cumulative losses rising to an astronomical Rs 30,000 crore or more by the end of financial year 2008-09. Other media reports also talk of staggering cumulative losses ranging anything between Rs 28,000 and all the way up to Rs 40,000 crore. The Centre for Asia Pacific Aviation estimates that Air India and Jet Airways together are incurring loss of $2 million (Rs 8 crore) a day in the prevailing scenario. In view of the fact that Jet Airways is a private company and has a respectable reputation for professional management, it is quite likely that Air India is responsible for the major share of this figure.