Air transport in the country is facing a number of problems. Both these corporations (Air India and Indian Airlines) are incurring constant losses (Air India has shown some recovery during 1997-99) and frequent strikes by the employees have become irritant. The surplus staff is another problem and source of loss.
Air India and Indian Airlines maintain a small fleet of 26 and 53 aircrafts which are insufficient and no match to advanced airlines. Majority of these aircrafts are old and obsolete. The British Airways and Singapore Airlines have a fleet of 256 and 80 aircrafts with an average age of 12.1 years. Due to the small size of the fleet, the airline has limitation to operate on selected routes and offer limited services. Still vast area of the globe and the country is beyond the reach of the Indian air services.
There has been constant decline in the quality of air services offered by Air India and Indian Airlines. Even their full capacity is not optimally utilised. According to one study the traffic share of
Air India in and out of India has dropped from 50 per cent in the late seventies to 22 per cent in recent years, as it was unable to expand.
The airlines manpower base is highest in the world. Its average is 700 employees per aircraft as compared to 200-250 average internationally.
The airlines in India still serve the elite class of the Indian society. Their fare is beyond the reach of middle class and poor people. The airlines have yet to fulfill their social obligations by making air travel cheaper and available to remote and inaccessible areas unnerved by rail and road transport.
Air India and Indian Airlines are facing stiff competition from foreign airlines whose services are better in quality and cheaper. These airlines need huge fund to replace aged aircrafts and expand their fleet to face the competition.
These airlines also suffer from mismanagement. Frequent strikes by pilots, employees and political interference earn bad name to airlines.
It is with these objectives the Government has decided to disinvest their share and invite private participation in their operation and management. Some advanced airlines like Singapore Airline has shown inclination to join with Air India.