How to put the Ma­haraja out of his mis­ery

The na­tional car­rier is ready for pri­vati­sa­tion. Will it lead to a fun­da­men­tal change in its cor­po­rate cul­ture?

Governance Now - - OPINION - DS Sak­ensa

The im­mi­nent sell-off of Air In­dia (AI) has evoked a wave of nos­tal­gia, par­tic­u­larly in peo­ple of the older gen­er­a­tion. There was a time in the 1950s and 1960s when Air In­dia and its coun­try cousin, In­dian Air­lines, were the pride of the na­tion; AI was our own air­line which was giv­ing tough com­pe­ti­tion to first-world air­lines. Though few In­di­ans could af­ford to fly then, all In­di­ans took im­mense plea­sure in the an­tics of the mous­ta­chioed ma­haraja. Air In­dia hostesses were justly famed for their beauty and poise; at least some of them mar­ried in­dus­tri­al­ists whom they had met on flight. When it was fly­ing high, Air In­dia helped a num­ber of air­lines of Asian coun­tries, such as Sin­ga­pore Air­lines and malaysian Air­lines, to come up. Air­lines of gulf na­tions were set up with ex­per­tise from Air In­dia per­son­nel hired pri­vately.

Alas, the golden days are gone now. Dubai air­port, not Delhi or mum­bai, is the hub for In­dian flyers. The cen­taur, a myth­i­cal crea­ture that is half horse and half hu­man, till re­cently por­trayed on the logo of Air In­dia aptly de­scribes Air In­dia, which is an en­tity that’s half gov­ern­ment and half pri­vate busi­ness: beau­ti­ful, but not of much use to any­one.

The rea­sons for the down­fall of Air In­dia are myr­iad – too many to be enu­mer­ated in a mag­a­zine ar­ti­cle. Suf­fice it to say that the top peo­ple al­ways looked upon Air In­dia as a milch cow. In a fa­mous in­ci­dent, prime min­is­ter Ra­jiv gandhi, who was once an In­dian Air­lines pi­lot, took two Air In­dia jets to Van­cou­ver for a meet­ing of the com­mon­wealth heads of gov­ern­ment; the Sul­tan of Brunei was the only other leader to come by his per­sonal jet. Till to­day, Air In­dia’s jets are req­ui­si­tioned by the gov­ern­ment at short no­tice and bills are not paid for years.

Af­ter the open­ing up of In­dian skies, the lead­er­ship of Air In­dia took hugely in­no­va­tive steps to hob­ble Air In­dia. The top bosses com­pletely aban­doned In­dian in­ter­ests while sign­ing bi­lat­eral agree­ments which have en­sured that for­eign car­ri­ers dom­i­nate In­dian skies and the share of Air In­dia keeps falling steadily in over­seas travel. Then there was the hare-brained scheme to add air­craft with­out any spe­cific plan for de­ploy­ment. In 2006-07, In­dian Air­lines placed or­ders for more than 40 Air­bus air­craft while Air In­dia or­dered 50 air­craft from Boe­ing. No pas­sen­ger sur­vey was done prior to this mas­sive pur­chase. There was no staff or in­fra­struc­ture for fly­ing these air­craft. Ac­cord­ing to a CAG re­port, five Boe­ing 777s and five Boe­ing 737s were kept on the ground from 2007 to 2009, re­sult­ing in a loss of ₹840 crore. more than 150 for­eign pi­lots were hired at ex­or­bi­tant salaries to fly these air­craft. It was sheer good luck that the de­liv­ery of B 787 Dream­lin­ers was de­layed; oth­er­wise there would have been more losses for Air In­dia. The in­ter­est on the ad­vance money paid for the pur­chase of these air­craft ac­counts for the ma­jor share of the losses for Air In­dia. In­ter­est­ingly, there was no penalty clause for late de­liv­ery in the agree­ments Air In­dia signed with Air­bus or Boe­ing.

The merger of Air In­dia and In­dian Air­lines (ini­ti­ated in 2007 and com­pleted in 2011) was the last nail in the cof­fin of the na­tional car­rier. No spe­cific rea­son was given for the de­ci­sion to merge the two. It was prob­a­bly felt that the move would re­duce re­dun­dan­cies, with fewer staff and space be­ing re­quired to run the merged air­line. How­ever, this did not hap­pen. Scratch the sur­face and even to­day you will find Air In­dia and In­dian Air­lines very much alive; one is Air In­dia (In­ter­na­tional) and the other is Air In­dia (Do­mes­tic). Prior to the merger, In­dian Air­lines was mak­ing mod­est prof­its while Air In­dia was mak­ing mod­est losses. Post-merger, losses started bal­loon­ing, even af­ter in­fu­sion of ₹25,000 crore by the gov­ern­ment. As of to­day, Air In­dia has a net worth of around ₹25,000 crore but has li­a­bil­i­ties of around ₹52,000 crore.

This should not have been the case. Air In­dia was es­tab­lished in 1932 as Tata Air mail, far ear­lier than any of its com­peti­tors. Tata Air mail made a mod­est profit in its very first year of op­er­a­tion. Even to­day, Air In­dia has a vast cap­tive pas­sen­ger pop­u­la­tion of gov­ern­ment em­ploy­ees. on do­mes­tic routes, Air In­dia gives a free bag­gage

Try­ing to re­ju­ve­nate Air In­dia with­out a fun­da­men­tal change in its cor­po­rate cul­ture would only amount to throw­ing good money af­ter bad.

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