Tuesday, July 07, 2009

Air India - Chickens coming Home...

see previous articles here and here

Finally the chickens are coming home to roost as Air India, the National Airlines that should have been brought to a level that it could have become the pride of the country, has been brought to the brink.

The Airlines is even having to delay payment of its monthly wage bill to the employees and the situation is not about to get any better soon unless the Government is made to bail it out. The employees who, incidentally, are no credit to their organization, are up in arms.

Agitating Employees
Red Flag for the Employees - too late to change, get ready for the sack

Sadly, this turn of events was visualized as early as 2005. Exactly a little over four years ago, Prajatantra had said almost prophetically (
see here):
“It remains to be seen whether the Government considers itself capable of achieving these tasks or is only delaying the process of disengagement and disinvestment. The country has lost heavily over the years by way of lost opportunities, due to inept management by the Government. Huge resources invested over the years have not yielded the desired results. It is now time for accountability. It would simply not do to commit further public resources and THEN hand over the assets and/or reins to outsiders on a platter – a possibility, which is already being forecast by some.”

Another article around the same time (
see here) further highlighted the shameful positions of the national airlines amongst the airlines of the world, once again hinting that the airlines could disappear in the oblivion without all out efforts.

Praful Patel - The man on the spot

And the man who was fully aware of the serious situation and expected to guide and direct these efforts to pull out the Airlines from the morass was the Minister of Civil Aviation. After all, the present condition of the airlines is not merely because of incompetent managements and employees but also due to lack of vision, inadequate responses and interference of the Ministry without any accountability - problems which only he could deal with.

Indeed, when Air India’s massive aircraft order of US $ 7 bn. to Boeing became controversial, Praful Patel casually shrugged it off saying that he had to think of future planning! (
see here). It was a strange statement, coming from the Minister responsible for the entire Civil Aviation sector, that an order for Rs. 33,000 crore was a petty matter, notwithstanding that Air India would have to justify such a huge capital expenditure by its earnings. Observers of what was happening saw in his statement, a wish to avoid an awkward discussion with regard to the contract. Taking his remark that he “had to think of future planning” at face value, by now he would have personally ensured in five years that the face of the national Airlines was completely changed to place them on a sound footing to regain leadership and remain competitive for the long run, rather than having to say now that “the management had complete freedom to act”.

Freedom to act

And what was his grand plan for the National Airlines?

He first changed the name of Indian Airlines to “Indian”, a part of a supposed image make over - Go for cosmetic face change if a real change from within is not possible. After all, Swissair (which collapsed earlier) changed its name to “Swiss”, so why not? It was a decision in the abstract, just spending a lot of money on the re-branding related activities – logos, designing, painting, advertising campaign and the like. The Minister grandly proclaimed: “We're sending out a strong signal that we're ready to take on private airlines. We can do it." (Dec. 2005) Since the name was changed, other airlines were allowed and indirect favors given to enable them to merrily go about increasing their share. Indian, previously a monopoly and with a half-century head start, ceded over 80% and now has only 17% of the domestic market. That is the situation of the Airline that has full Government backing and a Minister who is engaged in “future planning” (sell-out?). About the International Operations of Air India, whatever was said in the earlier articles has changed only for the worse.

The second measure was to form NACIL in 2007 to integrate Air India and Indian to supposedly take advantage of synergies between the two. With this plan, it was also understood that the name “Indian” would disappear, after having wasted huge resources in the re-branding exercise. In a classic case of putting the cart before the horse (see the Maharaja on the horseback
here), NACIL was formed without having any firm road map at all. This is evident from the fact that the so-called integration has not happened except perhaps the synergies of inefficiencies. A Business Process Re-engineering Consultancy RFI (Request for Information) was published as late as November 2008!

Other than these two measures and the earlier decision to place a “petty” order for Boeing aircraft, there is very little to show for what the Honorable Minister did in his previous stint, except uttering inanities and asking the management of the airlines to shape up. Most of the time of the ‘thinking for future planning’ seems to have been taken up in dishing out lucrative contracts for airport construction and maintenance. This is not to say that airport development is not equally important but retrieving the situation of the airlines was of prime importance as well. Instead, it has been allowed to deteriorate further which is hardly something that can be brushed aside.

Admittedly, there are immense problems with the National airlines, not too easy to solve, starting with employees unwilling to change with the times. But that is what he had set out to do. He should have acted in time, with urgency and done everything necessary including sacking of recalcitrant and useless employees. He did not do this.

Incidentally, the Honorable Minister also had a media blitz advertising campaign “Wings of Progress” designed with his picture prominently displayed lest people forget about his wonderful contribution to the growth of civil aviation in the country. Domestic Airline companies (including Air India), Airports Authority and airport contractors dependent upon the blessings of his Ministry, were made to fork out about Rs. 22 crore for the Campaign (see here).

The employees - major contributories to the inefficiencies

The Employee Unions have been pointing fingers at the Ministry under his charge for deliberately allowing a situation to be created whereby the airlines would not remain viable. This perception is getting wide spread as it is unthinkable that the Ministry which would not feel shy of interfering in the affairs of the airlines over relatively smaller issues would not exercise its authority to set things right, particularly if as is made out, the airlines management was not able to prevent a further slide. After all, it is the Ministry that is finally responsible for ensuring that the national assets under its charge are not allowed to go waste by neglect.

Air India is believed to have incurred losses last year in excess of Rs. 4,000 crore and is said to be looking for infusion of equity, soft loans as well as grant. At long last, the Minister has announced that a restructuring is planned to happen within 30 days. This would involve an overhaul of the airlines with a board of distinguished outside directors and also a multinational management team starting from the COO. To deflect responsibility, he has once again said that Air India must shape up and become leaner and trimmer. To take such actions at this late stage suggests that in all likelihood this could at best turn out to be just a mock drill. The Minister may be looking for these new teams to pull his already burnt chestnuts out of fire or come up with the conclusion that the situation is irretrievable. In the end, the country may end up selling its national pride for a pittance together with Rs. 33,000 crore worth of new aircraft procured under a "petty" order.

It is true that the management and the indifferent employees of the Airlines are responsible for many of the problems over the years. They have no excuse for their inefficiencies and incompetence and must bear the consequences for their own faults even if it means losing their jobs. But there is also a larger issue involved that of the failure of the Ministry and the man at its helm to take timely actions. Therefore, a complete overhaul should involve not only the airlines but also the Ministry at whose doorstep the ultimate responsibility for the mess becoming messier really lies. If no action is taken on this score, it would mean continuing with lack of accountability, incompetence and apathy of the bureaucrats and Ministers for whom turn around, bail out or belly-up make little difference.



At July 09, 2009, Anonymous Shanker said...

This is the perfect time to file BANKRUPTCY! Like GM let AIR INDIA be sold off and start afresh. There is NO POINT in trying to UNTANGLE THE MESS.... there is NO SOLUTION other than a WINDING UP and trying to RE-EMPLOY some of the people in a newly formed "NAVAIR INDIA". It is a cancer that needs to be removed quickly.

At July 09, 2009, Anonymous sm said...

interesting article,
the better solution will be to sell the air india

At July 10, 2009, Blogger keepcool said...

It would be sad if the airlines is sold.

but even if it is, the present minister in charge must not be there to oversee the same.

people are saying that his actions in the previous stint contributed to the situation where there would be no choice left but to sell.

At July 12, 2009, Anonymous Anonymous said...


thanks for inviting me to comment in this blog. wonderful blog you have.

yes, the problems of Air India seem to be never ending ... sometimes its the government that needlessly interferes ... and sometimes its the employee unions who become a thorn in the flesh.

certainly the "maharaja" has become "lean" and confused ... and is clearly bleeding.

as SM says ... i guess the answer lies in privatizing it completely ... but again its an uphill task with many obstacles from certain "stakeholders".

cant help but keep my fingers crossed, as to which direction the maharaja is headed.

At July 12, 2009, Blogger How do we know said...

And the solution is? Like the majority, i am inclined to say sell the company and be done with it. BUT, that takes all the punishment away from the people who are responsible for this mess... so, lets first punish the people behind this mess.. they are guilty of a financial crime. THEN, let their personal coffers pay for the mess. After their bankruptcy, the bankruptcy of the company should be declared.

If the company is a legal person, the death of a company should be treated at the same level as a murder, right? How come all murderers in this case get away by getting rid of the corpse ?

At July 12, 2009, Blogger keepcool said...

"How do we know"
has exactly put his finger on the raw nerve.

we cannot just allow public assets to be wasted in this manner and eventually opt for the easy way out and write them off, so that those who buy them can then make money.

Even if a sell-off becomes inevitable at some stage, let the people who are responsible for the mess, including the employees and the babus and the ministers get their just punishment.

It is time the people wake up and make their voice heard.

They can write to the President and the PM on their website feedback page. Do not worry that they will ignore your views. At least do your own bit.

At July 12, 2009, Anonymous Manju Kashyap said...

"sell off"
thats what the minister seems to have wanted in the first place going by what people say.

they know very well that when things come to such a pass everyone will have no choice but to say "sell off".

these are our politicians.

At July 12, 2009, Anonymous Namboodiri said...

the employees should be all paid off in the first instance and remployed to the extent necessary.

leave out the useless airhostesses and take newly trained hostesses who are professionals.

if DGCA allows, selected babus and employees can be taken on a flight and then mid-air, the door should be opened to give them a chance to jump off.

At July 13, 2009, Blogger adwet said...

interesting article, wonderful blog you have.

At July 13, 2009, Blogger Balvinder Singh said...

Frankly speaking, it is high time that the Governement stops running Airlines, Hotels, and other such facilities which are better left to private players who will ensure better quality of service.

Indian Airlines must have spent a huge amount in painting and repainting its logo from Indian Airlines to Indian and yet again to AirIndia.

I think the airline should be handed back to Tata family.

At July 13, 2009, Anonymous sadanandan said...

what balvinder says is very true that govt. is in many areas where it should not be.

this is a historic fact which cannot be denied.

the issue is of accountability and facing the consequences by those responsible.

of course, there is no more time for experimentation left for Air India and decision will have to be taken on how to get the govt. babus and ministers out of its hair.

it might happen that not only will they not face any punishments, they may end up making more money for themselves from the sale.

At July 14, 2009, Anonymous sridhar said...

interesting article boss...
well I will also suggest the best solution is to sell air india and if nt selling then at least lease it to some good airlines for some years...

At July 16, 2009, Blogger rick said...

Its high time now that govt should think of disinvestment seriously. All the PSU's which are like dormant tons on the pockets of the public and their shameless employees who are eating up the country from within like dermite should be handled with a pest control. These matters should handled over and above party politics and vote bank issues.

At July 17, 2009, Anonymous ms said...

why must every issue become political? inefficiency, poor service, shabby aircraft are due to the people who form the airline. keep saying air india this and air india that, nothing will be solved. start saying employees of air india and see the difference. similarly, everyone says that india is the only disfunctional democracy in the world, the system is corrupt, high level of inefficiency etc. place the blame on those responsible: the people are corrupt and inefficient. indians have no moral fibre and that is why there are gangrapes and murders everyday, the indian is capable of great violence and that is why we still have dowry deaths, acid-throwing hooligans, kidnapping of children. we even have godmen on tv who say that reality shows reflect the decadence of the west. sorry, guruji, the west has zero dowry deaths, low crime, more efficient workforce and respect for every thing female. all the decadence and obscenity is wonderfully indian!

At July 17, 2009, Blogger keepcool said...

you have raised some valuable issues which certainly deserve a solution.

the problem under discussion is specifically on air india and two points purely related to this case need to be dealt with:
1. what to do with air india.
2. not allow anyone responsible for the situation to go scot free.

the second is as important as the first because for too long have we tolerated wrong doings and negligence by ministers and bureaucrats and employees.


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