Air India story

All the major public enterprises that came my way had one commonality – its bureaucratic and political masters missed no opportunity to castigate the organization and its men for its problems. 

It however does not stand to reason that anyone other than the owner can be assigned the primary blame for the decline of an organization. We are yet to hear of a private sector enterprise in which the blame for its debacle was laid at the altar of its employees as it is invariably the owner who partakes of the nectar of success or the poison of failure.

It is indeed grossly unfair that Air India and its men have been unfairly castigated almost always for its dismal state of affairs. This very unfair reality needs to be placed in the right perspective.  

Air India and Indian Airlines were two perfectly fine airlines till they were merged in 2007. The decision to merge was not of the airlines but that of the owner, the Government of India and more specifically the then Ministry of Civil Aviation. This merger was not a minor affair for it put in great turmoil both organizations with seniority groups merging both at officer as well as staff level. With differences in HR policies, pay scales, designations, processes, structures and above all culture there was no way this merger could have led to anything other than a nightmare. The Justice Dharmadhikari committee that followed and in all fairness made efforts to sort out the imbroglio yet the merger stoked the very divide that it sought to extinguish with issues and emotions continuing to simmer even after over a decade. The organization immediately thereafter started following a downward trajectory that resulted in losses piling up.

The then government also took another decision, often regarded as controversial, that of purchasing planes of both Airbus and Boeing variety in bulk. And in all fairness it can be said that had that not been done, Air India of today would not be an airline for there would have been no planes in its arsenal. What really affected the airline badly was making it take loans to pay for the massive purchase. Even after some planes being sold off subsequently, the capital burden on account of purchase of planes and the interest charges thereon almost equals the equity infusion so far by the government against its so called turn-around plan.   

It is evident that the oft repeated statement of a dole being extended to Air India for its survival does not hold water. It is simply a case of the owner of a company paying for the capital goods purchased by it at the owner’s specific instance.

Both the loans taken for aircraft purchase and the piling up of losses triggered by the merger took the airline into a debt trap. And these losses the company started accumulating immediately after and because of the merger, a situation aggravated by the ban on fresh recruitment, high fuel prices, increasing competition from the private sector and at times an inept or conniving management. Yes the fact remains that the company was allowed to be in losses for almost ten years at a stretch, a totally unacceptable scenario.  

There is generally nothing wrong with the indian public sector except the way it is governed and the way it governs itself. Public sector enterprises that need to compete with the private, like the national carrier find themselves at a serious handicap for the inherent restrictions imposed by the general financial rules, tendering processes, multiplicity of masters and the onslaught of the three watchdogs that treat a mistake or a malafide on the same footing, make survival in a competitive environment almost untenable.   

It is a very difficult scenario that the public sector in India is generally faced with, yet it performs and therefore needs to be lauded not castigated. And moreover it is not as if the constraints are cast in stone, these are process issues that can be addressed provided there is a will. 

The Indian Public Sector is indeed at crossroads. Hamstrung by crippling constraints and castigated for inadequate deliverance, it has found a solution in disinvestment. The crippling constraints, dampen deliverance and the only way their potential can be fully exploited is by letting them free, an environment that only the private sector can provide. 

There are no easy answers, and the easiest path therefore emerges as the only alternative.