India Today - - FROM THE EDITOR-IN-CHIEF - (Aroon Purie)

In In­dia, we seem to spe­cialise in ru­in­ing great in­sti­tu­tions. Noth­ing il­lus­trates this bet­ter than the de­struc­tion of Air In­dia, es­tab­lished in 1948 as a joint sec­tor cor­po­ra­tion be­tween the govern­ment and Tata Air­lines. Five years later, the govern­ment de­cided to na­tion­alise the avi­a­tion busi­ness through the ‘back­door’ as the leg­endary JRD Tata com­plained to Prime Min­is­ter Jawa­har­lal Nehru. Nonethe­less the govern­ment looked to JRD for ad­vice and ap­pointed him chair­man of the in­ter­na­tional air­line, a post he re­tained un­til he was turfed out by Mo­rarji De­sai in 1978.

Those were Air In­dia’s glory days, with Tata writ­ing reg­u­lar notes to the air­line man­age­ment on ev­ery­thing from re­fresh­ments to the hair-dos of the air hostesses. Tata was the cus­to­dian of Bobby Kooka’s mas­cot, the gra­cious, hos­pitable, ever-smil­ing Ma­hara­jah, a job he took very se­ri­ously. I’ve trav­elled on Air In­dia fre­quently and ex­pe­ri­enced the de­te­ri­o­ra­tion over the years. I re­call once af­ter Air In­dia did its first logo change, I was trav­el­ling first class and the seat cush­ion­ing was so thin that I could feel the boards be­neath. I com­plained to the stew­ard, only to be told with a wink and a nod, “What can I say sir, it went for re­fur­bish­ing and the man­age­ment re­duced the cush­ion­ing by two inches think­ing no­body would no­tice.” When the crew start talk­ing to pas­sen­gers against the man­age­ment you know the air­line is doomed. Air In­dia has an ac­cu­mu­lated debt of Rs 52,000 crore and an­nual losses of Rs 3,000 crore ev­ery year. Its ser­vice is er­ratic, its pi­lots of­ten capri­cious, its cabin ser­vice atro­cious and the food ined­i­ble. Be­sides, it is fre­quently en­gulfed in scan­dal. As fi­nance min­is­ter Arun Jait­ley cor­rectly said re­cently: “If 86 per cent of the fly­ing can be han­dled by the pri­vate sec­tor, why not 100 per cent?”

The air­line has wit­nessed a se­ries of ter­ri­ble de­ci­sions. Two stand out. The ac­qui­si­tion of 111 air­craft for Rs 70,000 crore in 2005-06 at a time when it was deep in the red, and the merger of Air In­dia and In­dian Air­lines in 2007 un­der the brand name Air In­dia. While the mea­sure aimed to cre­ate an avi­a­tion mam­moth that would lever­age on syn­er­gies, it only helped birth an­other en­tity that was a drain on the pub­lic ex­che­quer. In 2002-03, the com­bined unit of In­dian Air­lines and Air In­dia lost Rs 63 crore. By 2010-11, the losses rose to nearly Rs 7,000 crore, mak­ing a mock­ery of the air­line’s plan to turn prof­itable three years fol­low­ing the merger.

In the past, there have been calls for pri­vatis­ing Air In­dia, but th­ese have en­coun­tered stiff re­sis­tance. A pro­posal to sell its real es­tate as­sets, which would have raised Rs 3,500 crore, was con­sid­ered in 2011 but only par­tially im­ple­mented. Now the govern­ment is con­tem­plat­ing strate­gic dis­in­vest­ment, which seems well timed given the civil avi­a­tion boom in In­dia and the grow­ing de­mand for cheap but qual­ity flights. The cover story, writ­ten by Group Edi­to­rial Di­rec­tor Raj Chen­gappa, ex­am­ines the op­tions be­fore the govern­ment and what is at stake. In 1994, Chen­gappa had re­ported for in­dia today on the Open Skies pol­icy that ended the mo­nop­oly of the national car­rier. Twenty-three years later, he analy­ses what the end of the govern­ment mo­nop­oly on the air­line means for the avi­a­tion busi­ness.

For the Naren­dra Modi govern­ment, which has so far not de­liv­ered on its cam­paign prom­ise of ‘the govern­ment has no busi­ness to be in busi­ness’, this is a sig­na­ture move for which it must be lauded. If it suc­ceeds, it would have done what ev­ery other govern­ment has thought of do­ing but never had the courage to do. Given Air In­dia’s vis­i­bil­ity and in­tractabil­ity, it would send a sig­nal across the world that In­dia is se­ri­ous about eco­nomic re­form. Hope­fully, the govern­ment will go on as it has be­gun and elim­i­nate the many other white ele­phants we pay for.

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