New Delhi, Nov. 27: Air India, Jet Airways and Kingfisher Airlines — the leaders in Indian aviation — have run up a combined loss of over Rs 12,191 crore, while recording a passenger growth of over 18 per cent in 2011.

The huge losses are a result of bets gone wrong and an environment characterised by rising fuel prices, according to an analysis by The Telegraph.

Air India was hit by a lethal mix of a hasty merger, decision to have more aircraft and a spate of forced “route rationalisation”. The state-run carrier faces a cumulative loss of Rs 7,195 crore and a debt burden of Rs 42,200 crore.

The merger was done without the management working out solutions to possible integration problems. “Till now, no action has been taken to resolve vital issues such as integrating human resources and flight operations. When the merger happened, the management promised that there would be one rank, one job, one pay for all, that’s yet to happen,” said R.N. Pathak, a former director of Air India.

To add to the woes, Air India lost 32 profitable routes, including some in the Gulf region, when the government opted for route rationalisation in 2008. Amid this turmoil, Air India jacked up its total order for Boeing and Airbus aircraft to around 111 planes from an earlier estimate of 78 aircraft. It ordered 27 Dreamliners from Boeing at a cost of around Rs 20,000 crore. Delay in the delivery of jets held up plans to launch flights on lucrative routes.

The cash-strapped carrier is now banking on a “turnaround plan”, which includes the infusion of capital, cost cuts and restarting of high density routes.

Business model

Kingfisher Airlines has an accumulated loss of over Rs 4,283 crore at the end of March 31.

“Kingfisher’s business model is not right for India — the fares are ridiculously low and the cost platform is very high. Mallya sold the idea of a boutique airline to customers who were not really willing to pay a higher price,” Pathak, who works as an independent consultant to foreign aircraft manufacturers, said.

The airline’s ambitious acquisition of Air Deccan in 2008 for $136 million also backfired. The airline, which was rebranded as Kingfisher Red by Mallya, had to be shut in September. Kingfisher’s debt now stands at around Rs 7,700 crore.

Mallya met SBI chairman Pratip Chaudhuri and top officials of other banks for a short-term loan of Rs 400 crore to meet day-to-day expenses. Mallya said his total fresh loan requirement was Rs 2,200 crore. Banks, which own 23 per cent of the airline and have lent close to Rs 7,000 crore to it, wants Mallya and the UB group, to bring in their own money before they lend more.

Fuel costs

The country’s largest private airline has blamed rising fuel costs and “predatory” pricing by low-cost rivals for its Rs 713.60-crore loss in the second quarter of 2011-12. During the half-year ended September, Jet suffered a net loss of Rs 836.8 crore against a net profit of Rs 15.9 crore a year ago.

Sources said Jet was planning to reduce its employee strength of nearly 16,000 by as much as 10 per cent. It is also planning to raise about $300 million through the sale and leaseback of 40 aircraft. The private carrier has already shut down bases at Hyderabad and Bangalore as a part of the cost-cutting exercise.