Much of the losses of Air India is due to the ad hoc manner in which it was merged with Indian Airlines. This caused resentment among its employees. The need of the hour is to foster discipline among its employees
Indian civil aviation is the fastest growing segment in the world. A large middle class that is more than the size of Europe, growing corporate economy and industrial infrastructure gives this sector an unbeatable opportunity to excel. According to a report, during 2011-2014, total aircraft movements and passengers have recorded a compound annual growth rate of 3.3 per cent and 5.6 per cent respectively. According to the Airports Authority of India, the aviation sector is expected to grow on similar lines in the next five years. Globally, India stands ninth in the civil aviation market. It ranks fourth in domestic passenger volume.
But most of the airlines are running in losses. While Air India is a classical case of mismanagement, Vijay Mallya’s Kingfisher Airlines is a classic example of unprofessional flamboyancy getting ruptured. Many of its aircraft are lying in the corners of airports, full of dust, getting corroded. This is a massive loss of resources. Wiser men, like the owner of Air Deccan, knew about the fallacy of selling the lowest fare of one rupee per ticket and after getting the deal for the sale of this airline, passing on the buck of his airline to others, leaving them to bleed.
For the past three decades, this writer has been a loyal customer of Air India and has found that it is one of the best airlines in terms of passengers treatment and services.
Air India would have been grounded long back, had the Government of India not bailed it out by a whopping package of Rs44,000 crore. The airline is still running in losses, though the losses have come down and operational costs are within manageable limits. Its staff is more serious than ever in bringing about a turnaround, but the heavy debt burden is having s toll on the airline’s profit.
The question is: Where is this flagship career headingIJ And how long, the tax payers’ money can be used to keep the airlines floatingIJ There are several reasons for the poor performance of the national carrier.
First, the merger of Air India and Indian Airlines promised synergy in action, but the way it was pushed through in an ad hoc manner, backfired, causing resentment among its employees. This has also killed the airline.
The top brass was kept happy with lots of promotions and perks, but the people at the ground level are still waiting for their problems to be solved. This cannot happen in any other airline in the world, where for the same job and for flying the same aircraft, employees carry their past baggage with them and are paid according to their past affiliation. Human resource development is a key aspect in any modern management regime, as it is this resource that can alter the fate of any organisation. This should have been solved first.
Second, many officers have occupied top positions in the airlines because of a routine bureaucratic way of making appointments and through connections. It is an entirely different ball game to run a Government organisation, based on a set of water-tight rules, conventions and procedures. Moreover, dadagiri does the job for a bureaucrat in a crunch situation. Making a loss-making enterprise into a profitable and viable unit requires not only experience but special skills and a vision.
Though the civil services has many talented officers, and many have brought a turnaround in their respective organisations, unfortunately at the time of the merger of the two airlines, none possessed the skill to handle the situation. Instead, at the behest of the political masters of the time, they kept on buying planes, ignoring issues of net worth and paid-up capital.
One of the most unimaginative decisions Air India took was to grant productivity-linked incentive to its staff. This concept means that productivity is assessed in terms of returns on investments and resources. It means that, if any office is getting more revenue per unit of expenditure, then it is justified to give incentives.
The way it was devised, it gave more to the top brass than to a person who actually brought business at ground and operational levels. It is worth mentioning that a report by the Comptroller and Auditor-General report revealed that a Chairman and Managing Director, on deputation, pocketed Rs25 lakh as productivity-linked incentive during his five-year tenure.
Another CMD took more than eight lakh rupees for his two-year tenure, as PlI. Another CMD went to court to get these undeserving benefits. The last CMD did not take any PlI and also proved as the best CMD of recent times in terms of loss recoveries, operational effectiveness and in creating an environment to provide effective leadership.
Now, a new CMD has joined, bringing with him an experience of turning around public sector units. Immediate action is needed to foster discipline among senior and middle level functionaries and to manage the airline as a purely commercial business enterprise.
The old Airbus 320 fleet needs to be grounded like the old Boeing 737 fleet which was phased out in 2006, to inspire public faith in the safety. The recent news of engine failures of two aircraft of Air India is not only scary, but it can damage the reputation of the airline.
The Government must ensure that a new civil aviation policy is in place so that the sector becomes the driving force for the Indian economy. The Government must provide better environment for all the airlines to operate smoothly but with stringent safety and operational norms. The infrastructure is not commensurate with the growth potential and opportunities.
One of the biggest challenges is congestion at airports, both from the point of view of economy of flying as well as safety. Airport charges, fuel costs etc should be uniform in the country and should not be more than what is available in other countries. Many private players in the airport management violate rules and passengers have to pay more for the facilities they get. The Directorate General of Civil Aviation must ensure that passenger comfort and safety is not compromised.
One big irritant is the baggage allowance of 15 kg in the domestic sector. It has to be in sync with the culture of a nation. It should be minimum 20-22 kg compulsorily. Indigo’s cargo handling policy is worth emulating for better utilisation of the capacity for profit enhancement. Their cargo charges are competitive with road and railway carriages.
There should be no let-up in connecting the far-flung areas with private airlines. These airlines have a national role to play as well. They can be provided with some Government incentives, but they must come up with reasonably affordable fares. Moreover, a business culture needs to be evolved in managing all the spheres of civil aviation industry to tap the real potential of the sector, which can become a driver of the economic growth.
(The writer is former Director General, Indian Council of Forestry Research and Education, and former Principal Secretary, Agriculture, Horticulture, Animal Resources and Forest Department, Government of Tripura)