Air India privatisation is not the solution to the massive debt that the airline has managed to accumulate. In order to resolve the situation, the Government must decentralise management and hire competent professionals
The Indian Government extended the last date for the receipt of Expression of Interests for Air India’s disinvestment due to a lukewarm response. Air India was once one of the preferred airlines all over the world when late JRD Tata established it in 1932 and over time, under his visionary leadership, it made a brand name for itself. Tata, himself an ace pilot, flew its first single-engine De Havilland Puss Moth on October 15, 1932, carrying air mail from Karachi to Bombay’s Juhu airport and continued flying to Chennai. After World War II, it became a public limited company and was renamed Air India. It required deep commitment and hard labour to make an international airline at that time. The commitment of service and quality it offered once is best explained by the conduct of JRD Tata himself, who refused to travel even in the long haul flights in the Business class and always traveled in the Economy class.
Apart from the personal example he set, it also had a management signal to keep the crew on their toes. The country must know the history of the takeover of Air India and the internecine fights it had with the Government before its privatisation. India must act in its national interest while privatising the national carrier considering that Air India provides a service; it is not just to make profits but to make travelling accessible to the many who can’t afford to fly. The decision to disinvest should not look like cutting off the head for treating a headache.
Around 300 letters written by JRD were published in 2004 on the occasion of his 100th birth anniversary. In one of the letters, JRD explains the pain and agony of the takeover of his airline. In the letter, he described how the then Communications Minister, Rafi Ahmed Kidwai made disparaging comments in the Constitution Assembly in 1949 about the airline.
JRD wrote to former Prime Minister Jawaharlal Nehru that “by resorting to incorrect and unfair statements and allegations, Mr Kidwai has convinced the majority of the members of the Assembly that the airlines in general, and Air-India in particular, are dishonest and greedy, cannot be trusted, and fully deserve their present plight.” Being pragmatic, Nehru replied and tried to clear the air and.in 1948 Hence, Air India International was set up in 1948 as the country’s first joint sector project between the Government and the private sector to start overseas flightsbegin international flights.
However, after five years, the Government decided to nationalise it and without having any consultation with JRD as the idea of public sector as panacea for all had taken over the nation’s psyche then.
Though Tata opposed the manner in which the takeover took place, he was convinced by Nehru to chair it and Tata, thus, continued as its Chairman till 1978, after which then Prime Minister Morarji Desai removed him unceremoniously. He was brought back again in 1980 for a few years by former Prime Minister Indira Gandhi.
The objective of narrating these facts is to recall history to learn from it and make well thought-out decisions. A thoughtful decision is necessary for a strategic financial entity like Air India to ensure that we have a strategic vision of controlling machines flying in our sky. Now let us discuss why the Government was forced to sell it off despite investing huge amount of money in purchaseing next generation aircrafts. It was a massive foolishness in going for huge loans without monetary backing and can aptly be described in a British proverb: “Penny wise, pound foolish.” Due to this, the airline is reeling under debt. However, this is not the only reason for its bad shape. The merger of Indian and Air India in 2007 was the biggest folly committed at the time and at best can be described as a tragic error.
The Government-controlled airline business has always been a victim of crony capitalism and is treated as a fiefdom of politicians and bureaucrats for appointing and promoting undeserving people to higher positions. Some of these people behaved like headless chickens during tense situations when thoughtful decisions were the need of the hour. You cannot pitch a tent by fitting square pegs in round holes. Besides, many competent airline professionals were sidelined in the war of favoritisms and with both of the merged airlines suffering from incompetency. This is considered to be the most valid point when it comes to selling off Air India.
However, whenever, competent Chairman and Managing Directors were at the helm of the affairs in the past, both of the Government-owned airlines did well. The most compelling argument for the present sell-off is the massive debt of more than Rs 52,000 crore and an annual interest burden of Rs 4,000 crore. The Government must thus,must also review the social service quotient of private airlines like Jet Airways, SpiceJet and Indigo before privatising Air India.
The performance of private airlines is nowhere near the net accretion value to public good and faith. The splendid example of evacuation by Air India during the Gulf War is for all to see. The on time performance and profitability of Indigo can be good from their own management point of view but not from the larger people’s welfare angle. The fate of Kingfisher Airlines is for all to see and there is no guarantee that the sell-off will not ground the airline after privatisation. The airline claimed a 20 per cent jump in the revenue recently and the Government should analyse this operational profitability claim and assess how and when it can repay the loan and recover the ground.
What is needed here is a decentralised efficient management of resources by competent professionals with excellent track records. Hire the world's best airline professional as the CEO and give him the freedom and resources. Other than Tata, no one in this country had the honesty, grit and business sense to steer an airline of Air India’s size and reach. If at all Government is bent upon it, it should rectify its mistake committed many decades ago and hand it over to Tata through a mutual agreement and by assessing the ongoing national consensus. Alternatively, it would be wise to consider separating the two merged airlines and cut down the manpower per aircraft at par with international standards.
The best option here would be to appoint a committee of experts to find out how to undothe mistakes of of the past. Similarly, the wrongs committed by people must be investigated and a fledgling airline's rescue attempt through sell off should be the last resort. As the saying goes, “to address a wrong it is not good to commit another wrong to be lamented later on.” After all “discretion is the better part of valour.”
(The writer is a Retired Civil Servant)