The Maharaja needs new clothes
India in 2007, the better. Its market share has monotonically come down from 60% to below 15%. It consistently lags behinds its peers on performance indicators like passenger load factor, complaints, delays and operational lapses. The third is personnel management. For instance, there has been no recruitment in AIL (except pilots and cabin crew) for the last 20 years. Ironically, in a country replete with young talent, the employees’ average age of 48 years is misaligned. There have been multiple failed attempts to restructure AIL. Privatisation and securing strategic partners have been discussed for decades. Its humongous debt and past liabilities is a constant deterrent. Political opposition, trade union action, exaggerated fears and ideological predilections remain insurmountable barriers.
What is the way forward then? There is a change in the overall milieu. This is the oppor- tune moment to think of the obvious, namely, privatise the carrier. Given legacy and other issues, this is easier said than done. It needs a multi-pronged and sequenced approach.
First, why not replicate the philosophy contained in the recent ordinance amending the Banking Regulation Act, 1949? It empowers a regulatory entity, i.e. the RBI, to take difficult bona fide decisions without excessive fear of vigilance and surveillance agencies. Second, constitute a consortium of banks, financial Institutions, corporate houses and airline operators to undertake a debt restructuring. Transferring management and shareholding to this consortium will foster sound commercial practices, improve the balance sheet, secure managerial optimisation and protect bona fide decision-making. Ceasing to come under the narrow definition of a PSU has many advantages. However, in any such process, majority shareholding must remain in Indian hands. Its unique identity emanates from its ability to promote Indian heritage, culture and soft power. Third, this consortium could then offload 26% of its share to a strategic investor and utilise the proceeds to repay the debt. The consortium and the strategic partners could secure commercial viability, even in this competitive oligopolistic market. Employee conditions can be protected as also the fear of a takeover by a foreign airline. A special inter-ministerial oversight committee under the cabinet secretary or the PMO can monitor time-bound implementation.
The ‘Emperor’ must be dressed innovatively and enabled to join the beauty pageant. The time to act is now.