Nobody gained from the Air India pilots' strike. But the 10-day strike did leave behind a significant amount of damage. The airline, which is struggling to attract passengers, lost out on valuable holiday season bookings.

Its brand image was also tarnished, with the strike shaking up passengers' faith in Air India. With private airlines prospering during the strike, questions were also raised on the viability of Air India's presence in the domestic aviation industry.

Bookings lost

Air India has seen its market share slip away steadily. However, just days before the strike, Air India's strategy of summer special low fares was proving to be correct.

Passenger load factor on the day of the strike was close to 80 per cent, according to airline officials. “Even forward bookings were close to 77-80 per cent because of the holiday season. So we were doing well,” said a senior Air India official.

But the strike grounded more than 1,000 flights during the 10-day period, resulting in Air India losing out on a large number of passengers.

For the duration of the strike, the seat offerings per day had declined by 22,500. As compared to 30,000-32,000 seats on offer every normal day, during the strike, the number slipped to 9,500. All this resulted in a revenue loss of close to Rs 150 crore for the 10-day period.

Despite Air India's best efforts to ease the problems of the passengers and increase capacity, little could be done to accommodate all of them. Private airlines picked up 15,000-16,000 of Air India's domestic passengers.

Wrong Timing

The strike came at the worst possible time from a passenger's perspective. Thousands of passengers were affected by it in the midst of a busy holiday season for airlines.

It was also bad timing for Air India. The strike came when the airline was in talks with 20 banks on restructuring debts to reduce borrowing costs.

After the lenders agree to the proposals of the airline's debt restructuring plan, the Reserve Bank of India will approve it, following which a turnaround plan will be submitted to the Ministry of Finance.

The strike effectively delayed the whole process as the Air India management was occupied with trying to find ways to end the strike.

“If the strike had not taken place, we would have been working on finalising the restructuring plan. However, despite the delays, we plan to submit the restructuring plan to RBI by the end of May,” said an Air India official recently.

Airline Stocks Jump

Coincidentally, with Air India's operations being crippled, airline stocks in the country rose sharply. Stocks of Jet Airways, Kingfisher and SpiceJet — the three listed airlines — rose by 11.5 per cent, 10.46 per cent and 10.72 per cent respectively on Friday on the BSE.

For Jet Airways, it was the biggest gain in more than a year, while for SpiceJet it was the biggest gain since September 2009.

According to analysts, the surge in stock prices was due to a sales jump because of the Air India strike as well as a drop in oil prices. Oil prices tanked over the last week following news of Osama Bin Laden. On Friday, crude oil prices slipped below $100 mark on the New York Mercantile Exchange and stayed below $100 for a long duration.

“Private airlines benefited during the week because load factors were high and yield was higher because of higher fares. This combined with a drop in oil prices helped propel the airline stocks,” said a stock analyst.

“Certainly, there has been an increase in load factor,” said Kingfisher Airlines' Chief Executive Officer, Mr Sanjay Aggarwal, last week.

Thus, the strike has inadvertently raised the question of Air India's viability, according to analysts. Air India's operations even while running losses has been hurting the domestic aviation industry, according to Mr Peter Harbison, Executive Chairman of Centre for Asia Pacific Aviation

Futile Strike

In the end, the strike achieved nothing. None of the pilots' original demands were conceded to even after two days of talks. But the 10-day strike, one of the biggest in recent years in Air India, left its mark on the airline's account books, stock markets and, most importantly, passengers.

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