Putin is Helping India to Sell Its National Airline
Founded on the 15th of October 1932, Air India, India’s national airline carrier, has been the pride of the country, operating Boeing and Airbus aircraft and serving over 94 domestic and international destinations. The airline also became the 27th member of Star Alliance on 11 July 2014, which gave the customers of the “Maharaja”(the name given to the airline carrier) an immense amount of confidence and trust in the airline carrier.
The Downfall of Air India
In 1948 the govt of India had acquired 49% of the airline and made it the Air India International. By the 1960s the dominance of Air India’s dominance spread across several continents. Everything was great for this airline until 27th December 1947, when a Douglas DC-3 (registered VT-AUG) carrying nineteen passengers and four crew en route from Karachi to Bombay, crashed after take-off from Karachi International Airport due to instrument failure, killing all on board. This was the airline’s first fatal accident. Another crash took place on 3rd November 1950. The number of accidents and incidents for Air India was rising, one even including a hijack.
On 23 May 2001, the Ministry of civil aviation charged the then-managing director, with corruption. According to the ministry reports, the airline lost approximately ₹570 million (US$8.0 million).
In 2007 Air India was merged with the Indian airlines after which, the merger saw a complete loss of 1 billion dollars by 2009. By March 2011, Air India had accumulated a debt of ₹426 billion (US$6.0 billion) and an operating loss of ₹220 billion (US$3.1 billion) and was seeking ₹429 billion (US$6.0 billion) from the government.
The Bid to Sell the Airline
Fed up with the increasing operating costs and high debt of the airline, in 2013, the then civil aviation minister of India stated that privatization was the only option to keep the airline going which was opposed by the opposition parties in the country, but eventually, in 2017, the government of India approved the privatization of Air India In March 2018, Government-issued “Expression of Interests”’ to sell 76% stake of Air India along with Air India Express and 50% stake of AISATS. But, as there were no buyers to agree to the terms to buy only 76% of the airline, the government decided to sell 100% of the airline in late 2019.
Vladimir Putin and Oil Prices
In December 2016 the OPEC signed an agreement with non-OPEC (which also included Russia) oil-producing countries to increase oil production by 1 million barrels per day to attack US oil production. But the oil production companies in the US sustained the losses.
In today’s scenario, the Coronavirus has made havoc all across the world. The economy is at its low. The use of oil has also decreased substantially causing a dip in air travel and shipping, due to which the demand for oil is decreasing which is causing the oil price to lower down.
On the 5th of march this year, OPEC called for a meeting to reduce the production of the oil to keep the oil prices stable, so that the oil-producing countries can make their profits.
But Russia did the complete opposite, it rather raised the production of oil which subsequently lead to the crash of oil prices, which further lead to the breaking of alliance from OPEC.
The steps were taken by Putin also lead to the loss of Russia, but the purpose was solved, the purpose of attacking the United States, one of the major oil producers in the world.
In response, even Saudi Arabia has increased its oil production to sustain the market share in oil.
Sell Off in Low Oil Price
Here the biggest profit of this oil war will be enjoyed by many oil-importing countries including India. In response to which the government of India has also increased the taxes to remain more economically stronger.
The straight impact of reduced oil price will be seen on the aviation turbine fuel price which will be reduced in India after March 21 by 14%, which will also give relief to other airliners in the country.
The extension of dates to sell Air India and the reduced prices of the aviation turbine fuel combined might be a good opportunity for the potential buyers of the airliner.
