Privatising A-I is the only option

                       

         by Rajiv Kumar

 

The Air India saga continues to unfold in its dismal, depressing and yet sadly predictable manner. It is not the first time that this tragic farce is being played out and certainly will not be the last if Air India continues as a public sector enterprise (PSE). Similar to a two star rated Bollywood movie, the main players, side actors, and outsiders (in this case, however, they also foot the bill as taxpayers) know the script by heart.

The strike has been called because the management will not pay heed to the employees' demands otherwise. Now both sides will toughen their respective stands, simply to improve their bargaining positions in the negotiations that both of them know will inevitably follow. More employees will join the striking pilots; the management will persist in turning the media against the well heeled pilots and in public appeals to save taxpayers' money.

Justification

These appeals have zero credibility as the taxpayers have been sufficiently educated by the CAG, Anna Hazare and others on flagrant squandering and swindling of the public exchequer by those charged with the direct responsibility of safeguarding it. The issue is bound to be escalated to the higher authorities who will then appeal to both sides to protect national interest and prestige; minimise passengers' plight, and end the sufferings of pilots' families and avoid further revenue loss. Some kind of compromise will be worked out but only until the next major dispute that will again precipitate a strike because in the government these days we practise management by crisis.

The answer to the simple question as to who benefits from this ongoing mess is a rather straightforward one. Continuing with Air India as a public sector enterprise serves the entrenched vested interest of no more than a hundred thousand persons, including the employees in a country of 1.2 billion!! Its continuation as a PSE has no strategic implications and not even in the wildest stretch of imagination does it serve the interests of either the poor or the so called aam aadmi. There is though one patently spurious argument in support of its continued status as a PSE. This is about connecting far flung and sparsely populated regions of our country and for serving the annual air travel needs of religious pilgrims. This argument is as spurious as saying that villages can be connected to the telecom network only by BSNL and only public sector road transport services can connect rural destinations. Both these arguments have been proved totally false in real life experience. And even the slightest bit of honest thinking will reveal to all concerned that public service objectives can be far more efficiently achieved by a judicious and well regulated operation of publicprivate partnership, with the government partly footing the bill as in viability gap funding.

Now that even the Minister in charge of Air India has said in a television interview that the government is not equipped to manage a service industry, is it not high time that an entity which neither serves public interest nor earns revenues for the government, is immediately and comprehensively handed over to the highest private sector bidder whether domestic or foreign and preferably hailing from the airlines sector? All rational persons I am sure will back a privatisation plan for Air India. Even in private hands it will remain an Indian company and if its performance does improve, as it will most likely do, under private ownership, we will all be proud of it as we were of the Maharaja and are of other Indian airlines which are now competing successfully with the best in the world.

Vested interests

The only possible losers will be a handful of those persons who get to travel first class on public account and can have seats reserved for themselves even if at times it means unnecessary waste of a high paying seat.

We all know precisely who these folks are and I am sure that we all agree that this cannot be sufficient reason for continuing with Air India as a PSE. The short but critical point is that Air India should be privatised as soon as possible. This should be done even if it means having to pay a strategic investor perhaps by offering them the lucrative bilateral routes currently owned by Air India under the IATA's global oligopolistic arrangement, which itself is a bit of an anachronism.

The global civil aviation industry is a tough place with cut throat competition and owners with deep pockets and airlines with massive economies of scale. They are out to grab greater market share.

Industry

In this viciously competitive environment, made more difficult by the industry's long cycles of troughs and peaks, only the best can hope to survive. Air India, as a PSE, with its senior management being made up of civil servants, who are perpetually uncertain of both their actual authority and their tenure, is badly hamstrung to face this competition. We need advanced management and HR practices that will motivate the staff, give them ownership in the company and a sense of pride and fulfilment in achieving success.

We are too far away from that paradigm to even contemplate getting there. So any attempt to find a 'solution' or fix the problem within the present framework is bound to fail as happened in a previous phase when the Air India's Board with leading lights from the corporate world tried to devise a plan to revive it. There is simply no alternative to privatising Air India. The longer we refuse to bite the bullet, the greater will be the damage to national pride, the public exchequer and the Indian civil aviation industry. For India's sake let's act decisively now.

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- The writer is Secretary General of FICCI. The views are strictly personal.

Posted just now by Press Conference-Sagar31News