In what is a massive embarrassment for Air India, the Controller and Auditor General of India (CAG) has rapped it for understating losses to the tune of Rs 6,415 crore in three years from 2012.
According to a report in Hindustan Times, the CAG submitted a report to the Parliament, claiming that instead of an operating profit (money made before tax and interest payouts) of Rs 105 crore reported by the carrier last October for the year of 2015-16, Air India had actually suffered a loss of Rs 321 crore.

Ironically, this had been the first time in a decade that Air India reported operational profits.
Did Air India lie about profits on purpose?
The CAG has been careful about not alleging the state-owned carrier of willful mis-reportage.
“The airline on a standalone basis made an operating loss of Rs 321.4 crore … We won’t say this was due to misreporting but this was due to non-provisioning,” CAG Director V Kurien told HT.
‘Non provisioning’ means the carrier did not make provisions for expenditures such as depreciation and maintenance in its balance sheet.
Air India’s balance sheet did not include provisions for payment of liabilities, such as paying employees for unused leaves or payments of outstanding sums to the Airports Authority of India and payment to employees for encashing leave.
According to the report, the contrasting numbers are also due in some part to over-valuation of an Air India property in Delhi.
The national auditor alleged that the mistakes may have been caused due to Air India’s failure to heed the instructions and guidelines provided by a state-appointed committee.
The committee had been appointed by the state to look into financial restructuring of the state carrier following sustained losses.
However, the airline has been messing up for a while…

- In January this year, Air India was named in a survey by aviation data site FlightStats as the third worst airline in the world, a charge the carrier indignantly denied as being fabricated. Though FlightStats later claimed they did not essentially name AI as the ‘third worst in the world’, but confirmed that their data was based on efficiency and user satisfaction of airlines in the world.
- In 2012, a drowning Air India was kept afloat with a bailout package worth approximately Rs 30,000 crore, to be paid to the carrier over a course of 9 years. The UPA government implemented the bailout package, which was aimed at reviving the fluctuating finances of Air India, and was paid for with taxpayers’ funds. As of July 2016, Rs 22,500 crore of that package had already been paid to AI.
- In 2013, Air India came under a lot of criticism for selling five of its wide-body Boeing 777-200 long-range aircrafts at prices allegedly much lower than expected market value, to Etihad Airways.
- In 2014, the government appointed a committee of experts to look into the cash-strapped carrier and suggest guidelines to reduce losses and achieve its ‘full potential’. However, the recent CAG report claims that the guidelines regarding cutting expenditures (includes 5-star lodging expenses for pilots incurred by AI), were ignored.
- On 31 March 2015, the total debt owed by Air India was approximately Rs 51,000 crore, and accounted for the largest chunk in the total debt pile of Indian airlines. The debt was reportedly brought down to Rs 46,000 in March 2016 after the supposed operational profits, Economic Times reported.
- According to this May 2016 report, Air India’s losses stood at Rs 5490.16 crore, Rs 6279.6 crore and Rs 5859.91 crore for the years 2012-13, 2013-14 and 2014-15 respectively. (Data provided by Airline to Parliament)
- Air India has also held its spot as the leader in terms of customer complaints, with 32,518 complaints from passengers about issues like delays in flight, cancellations and delayed boarding in the domestic sector. (DGCA data for March 2016)

The CAG report will be used by the government to reevaluate the 2012 bailout restructuring plan. The total sum of bailout funds to be given to the carrier may be re-assessed since AI has already breached loan limits that the restructuring plan set on it.
Air India meanwhile, plans to expand. According to a report in HT, the air carrier’s head Ashwani Lohani recently announced that AI will acquire 35 new planes this year.
Feature Image Source: Reuters (File)