Friday, Dec 15, 2017 | Last Update : 09:27 PM IST

Time for Air India’s makeover?

THE ASIAN AGE.
Published : Jul 6, 2017, 5:40 am IST
Updated : Jul 6, 2017, 5:40 am IST

India no longer needs a state-owned national airline.

The government-appointed corporate stalwarts on the AI board of directors have failed to provide strategic leadership.
 The government-appointed corporate stalwarts on the AI board of directors have failed to provide strategic leadership.

State has taken a toll on Air IndiaJitender Bhargava

The concept of a national carrier perhaps came in when there was only one airline existing in a country; that too, largely government-owned. Globally, that particular airline was equated with the country because its name included that of the country — Air India, Air France, British Airways, Singapore Airlines, etc. Since that era, not only have many government airlines across the world been divested, private airlines have also come up in all countries, including India. The concept of one carrier enjoying an edge over others by virtue of being designated as national carrier is thus no longer valid. 

No one had ever contested Air India being a national carrier till a few years ago because Air India had been a symbol of national pride worldwide. However, with its increasing marginalisation, and huge losses largely on account of flawed decisions taken by the government as its owner, much of the sheen has worn off; the esteem in which people held the airline has also eroded, making people question the relevance of a national carrier.

It is generally believed that Air India has been a huge beneficiary of government ownership, whereas government ownership has taken a very heavy toll on the airline too. The government-appointed corporate stalwarts on the AI board of directors have failed to provide strategic leadership. The government also appointed and dismissed CMDs at will affecting continuity. As a PSU, it has to embrace an unproductive work ethic and employ far more people than private airlines. Air India also has to follow government-stipulated payscales, recruitment and promotion policies. Under the given structure, the airline pays its employees at junior levels salaries that are higher than their counterparts in private airlines, and its senior employees get emoluments less than their counterparts. But more importantly, as a government airline, Air India is forced to work within a bureaucratic operational framework, and the decision-making is so slow that it impacts the airline’s ability to promptly counter adverse marketing conditions.

The government ownership also lends an erroneous impression among politicians and bureaucrats that they can treat it as part of their personal fiefdom such as the desire for being treated as a VVIP or seeking extra benefits like free upgrades to business/first class.

Most people also believe that one of the functions of the national carrier is to carry out evacuations during national emergencies, be available to the government for flight operations at will. My belief is that the government asks Air India to execute these functions because it owns it and therefore believes it has the right to make Air India undertake flights at short notice since no pre-negotiations on fares and payments need to be made in advance. 

However, as we have seen on some occasions, whenever flights have to be operated to evacuate Indians or provide relief to a foreign country on behalf of the Union government, as in the case of Nepal in the wake of the earthquake there, all Indian private carriers too operated flights. There is also a mistaken notion between government-ownership and a national carrier. 

A differentiation is needed because government ownership cannot automatically make an airline a national carrier and a national carrier, if designated as such, need not necessarily be government-owned.
Jitender Bhargava is a civil aviation expert and a former Air India executive director 

 

How will the govt dispose of its assets? 
D. Raja

The decision to disinvest Air India is wrong. It is a government carrier that has immense strength as far as personnel is concerned. It has huge properties, which could have been handled better. 

The main problem with the carrier is that it has management issues. The fact is that the Central government wants to finish off the public sector in this country. The decision to sell off the Maharaja is in line with this thought process. 

It just shows the government’s orientation towards privatisation. They are just keen on selling off everything.  It is even trying to privatise certain parts of the Railways and ports. 

The government has already disbanded the Planning Commission and has formed the Niti Aayog, whose sole prerogative is to privatise. The privatisation of Air India is a hugely wrong decision. It has been proved time and again that private airlines have never been successful in India. 

Public sector companies like Air India manage to stay afloat despite all efforts by successive governments and managements to run them down; take the examples of Kingfisher Airlines and East-West Airlines. Also, don’t forget the case of Air Deccan and Damania Airways.  As far as Kingfisher Airlines is concerned, its promoter Vijay Mallya ran away with the salaries of his airline’s employees and seems to be thoroughly enjoying himself in the United Kingdom.

The government must tell us what benefit it will get by privatising Air India. What happens to the huge staff and how will the government dispose of its huge assets? The airline possesses land and buildings in the heart of almost all major cities, and also some cities abroad, which are together worth thousands of crores of rupees.

We need to first explore whether Air India should be privatised or efforts should be made to restore some degree of its health to make it more competitive. 

Perhaps the best option would be to revamp only the management at this stage to retain its public sector character.  

The belief that the private sector knows how to run airlines is incorrect. It is true that the UPA government’s decision to merge Air India and Indian Airlines did not yield the desired results, but for this we can’t let the employees suffer.

If this government is at all serious about turning around Air India, then it should write off the airline’s debt once and for all. Banks should be ready to forgo a substantive part of their loans to the airline. 

Following this, the government should ask financial institutions to pick up equity in Air India and form a specialised board to manage it. With 140 planes, Air India has the largest fleet of planes in India.

We will raise the issue in Parliament when the Monsoon Session begins on July 17. I will reiterate that divesting Air India will be detrimental to the national interest. 

Our party will insist that the reason behind Air India’s huge debt is because of the wrong decisions taken by the government, and for that it cannot penalise a commercial organisation. 

Air India has many other responsibilities, other than mere profit generation, which no other private airline does in our country. Whenever there are natural disasters or state visits, Air India is there.

D. Raja is national secretary of the CPI and a Rajya Sabha member

Tags: air india, niti aayog, privatisation